Correlation Between HPQ Silicon and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both HPQ Silicon and Lithium Americas 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 HPQ Silicon and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HPQ Silicon Resources and Lithium Americas Corp, you can compare the effects of market volatilities on HPQ Silicon and Lithium Americas 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 HPQ Silicon with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of HPQ Silicon and Lithium Americas.
Diversification Opportunities for HPQ Silicon and Lithium Americas
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HPQ and Lithium is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding HPQ Silicon Resources and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp and HPQ Silicon 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 HPQ Silicon Resources are associated (or correlated) with Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of HPQ Silicon i.e., HPQ Silicon and Lithium Americas go up and down completely randomly.
Pair Corralation between HPQ Silicon and Lithium Americas
Assuming the 90 days horizon HPQ Silicon Resources is expected to under-perform the Lithium Americas. In addition to that, HPQ Silicon is 1.21 times more volatile than Lithium Americas Corp. It trades about -0.1 of its total potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.05 per unit of volatility. If you would invest 585.00 in Lithium Americas Corp on September 4, 2024 and sell it today you would lose (30.00) from holding Lithium Americas Corp or give up 5.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HPQ Silicon Resources vs. Lithium Americas Corp
Performance |
| Timeline |
| HPQ Silicon Resources |
| Lithium Americas Corp |
HPQ Silicon and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HPQ Silicon and Lithium Americas
The main advantage of trading using opposite HPQ Silicon and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HPQ Silicon position performs unexpectedly, Lithium Americas 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 Lithium Americas will offset losses from the drop in Lithium Americas' long position.| HPQ Silicon vs. First Majestic Silver | HPQ Silicon vs. Ivanhoe Energy | HPQ Silicon vs. Orezone Gold Corp | HPQ Silicon vs. Faraday Copper Corp |
| Lithium Americas vs. American Lithium Corp | Lithium Americas vs. Ballard Power Systems | Lithium Americas vs. Lightspeed Commerce | Lithium Americas vs. WELL Health Technologies |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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