Correlation Between Canoo Holdings and American Lithium
Can any of the company-specific risk be diversified away by investing in both Canoo Holdings 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 Canoo Holdings and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoo Holdings and American Lithium Minerals, you can compare the effects of market volatilities on Canoo Holdings 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 Canoo Holdings with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo Holdings and American Lithium.
Diversification Opportunities for Canoo Holdings and American Lithium
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canoo and American is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Holdings and American Lithium Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Minerals and Canoo Holdings 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 Canoo Holdings 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 Minerals has no effect on the direction of Canoo Holdings i.e., Canoo Holdings and American Lithium go up and down completely randomly.
Pair Corralation between Canoo Holdings and American Lithium
Assuming the 90 days horizon Canoo Holdings is expected to under-perform the American Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Canoo Holdings is 1.04 times less risky than American Lithium. The stock trades about -0.01 of its potential returns per unit of risk. The American Lithium Minerals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11.00 in American Lithium Minerals on August 30, 2024 and sell it today you would lose (8.28) from holding American Lithium Minerals or give up 75.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Canoo Holdings vs. American Lithium Minerals
Performance |
| Timeline |
| Canoo Holdings |
| American Lithium Minerals |
Canoo Holdings and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoo Holdings and American Lithium
The main advantage of trading using opposite Canoo Holdings and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo Holdings 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.| Canoo Holdings vs. EVgo Equity Warrants | Canoo Holdings vs. Canoo Inc | Canoo Holdings vs. Paysafe Ltd Wt |
| American Lithium vs. Applied Minerals | American Lithium vs. Artemis Resources | American Lithium vs. St Georges Eco Mining Corp | American Lithium vs. Atco Mining |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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