Correlation Between Jervois Mining and American Lithium
Can any of the company-specific risk be diversified away by investing in both Jervois Mining 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 Jervois Mining and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jervois Mining and American Lithium Corp, you can compare the effects of market volatilities on Jervois Mining 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 Jervois Mining with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jervois Mining and American Lithium.
Diversification Opportunities for Jervois Mining and American Lithium
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Jervois and American is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jervois Mining 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 Jervois Mining 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 Jervois Mining 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 Jervois Mining i.e., Jervois Mining and American Lithium go up and down completely randomly.
Pair Corralation between Jervois Mining and American Lithium
Assuming the 90 days horizon Jervois Mining is expected to generate 2.05 times more return on investment than American Lithium. However, Jervois Mining is 2.05 times more volatile than American Lithium Corp. It trades about 0.07 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.05 per unit of risk. If you would invest 0.90 in Jervois Mining on September 1, 2024 and sell it today you would earn a total of 0.06 from holding Jervois Mining or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jervois Mining vs. American Lithium Corp
Performance |
| Timeline |
| Jervois Mining |
| American Lithium Corp |
Jervois Mining and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jervois Mining and American Lithium
The main advantage of trading using opposite Jervois Mining and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jervois Mining 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.| Jervois Mining vs. Ardea Resources Limited | Jervois Mining vs. Centaurus Metals Limited | Jervois Mining vs. Canada Silver Cobalt | Jervois Mining vs. Blackstone Minerals |
| American Lithium vs. BCE Inc | American Lithium vs. Radcom | American Lithium vs. NETGEAR | American Lithium vs. Space Communication |
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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