Correlation Between Lithium Americas and Atlas Lithium
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Atlas 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 Lithium Americas and Atlas Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Americas Corp and Atlas Lithium, you can compare the effects of market volatilities on Lithium Americas and Atlas 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 Lithium Americas with a short position of Atlas Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Atlas Lithium.
Diversification Opportunities for Lithium Americas and Atlas Lithium
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lithium and Atlas is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Atlas Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Lithium and Lithium Americas 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 Lithium Americas Corp are associated (or correlated) with Atlas Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Lithium has no effect on the direction of Lithium Americas i.e., Lithium Americas and Atlas Lithium go up and down completely randomly.
Pair Corralation between Lithium Americas and Atlas Lithium
Given the investment horizon of 90 days Lithium Americas Corp is expected to under-perform the Atlas Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Lithium Americas Corp is 1.81 times less risky than Atlas Lithium. The stock trades about -0.03 of its potential returns per unit of risk. The Atlas Lithium is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 804.00 in Atlas Lithium on August 24, 2024 and sell it today you would lose (11.00) from holding Atlas Lithium or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Americas Corp vs. Atlas Lithium
Performance |
| Timeline |
| Lithium Americas Corp |
| Atlas Lithium |
Lithium Americas and Atlas Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Atlas Lithium
The main advantage of trading using opposite Lithium Americas and Atlas Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Atlas 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 Atlas Lithium will offset losses from the drop in Atlas Lithium's long position.| Lithium Americas vs. Dolphin Entertainment | Lithium Americas vs. Cleantech Power Corp | Lithium Americas vs. PennantPark Floating Rate | Lithium Americas vs. Organic Sales and |
| Atlas Lithium vs. SilverCrest Metals | Atlas Lithium vs. New Pacific Metals | Atlas Lithium vs. Endeavour Silver Corp | Atlas Lithium vs. McEwen 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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