Correlation Between Entree Resources and American Lithium
Can any of the company-specific risk be diversified away by investing in both Entree Resources and American Lithium at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Entree Resources and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entree Resources and American Lithium Corp, you can compare the effects of market volatilities on Entree Resources and American Lithium and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Entree Resources with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entree Resources and American Lithium.
Diversification Opportunities for Entree Resources and American Lithium
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Entree and American is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Entree Resources and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Entree Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Entree Resources are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Entree Resources i.e., Entree Resources and American Lithium go up and down completely randomly.
Pair Corralation between Entree Resources and American Lithium
If you would invest 97.00 in Entree Resources on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Entree Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Entree Resources vs. American Lithium Corp
Performance |
| Timeline |
| Entree Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Lithium Corp |
Entree Resources and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entree Resources and American Lithium
The main advantage of trading using opposite Entree Resources and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entree Resources position performs unexpectedly, American Lithium can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American Lithium will offset losses from the drop in American Lithium's long position.| Entree Resources vs. Sun Summit Minerals | Entree Resources vs. Azarga Metals Corp | Entree Resources vs. Pampa Metals | Entree Resources vs. Progressive Planet Solutions |
| American Lithium vs. Olympic Steel | American Lithium vs. Kaiser Aluminum | American Lithium vs. Diageo PLC ADR | American Lithium vs. Century Aluminum |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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