Correlation Between Lithium Americas and Link Real
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Link Real 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 Link Real 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 Link Real Estate, you can compare the effects of market volatilities on Lithium Americas and Link Real 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 Link Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Link Real.
Diversification Opportunities for Lithium Americas and Link Real
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lithium and Link is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Link Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Real Estate 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 Link Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Real Estate has no effect on the direction of Lithium Americas i.e., Lithium Americas and Link Real go up and down completely randomly.
Pair Corralation between Lithium Americas and Link Real
Given the investment horizon of 90 days Lithium Americas Corp is expected to under-perform the Link Real. In addition to that, Lithium Americas is 1.39 times more volatile than Link Real Estate. It trades about -0.03 of its total potential returns per unit of risk. Link Real Estate is currently generating about 0.01 per unit of volatility. If you would invest 459.00 in Link Real Estate on September 2, 2024 and sell it today you would lose (19.00) from holding Link Real Estate or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.26% |
| Values | Daily Returns |
Lithium Americas Corp vs. Link Real Estate
Performance |
| Timeline |
| Lithium Americas Corp |
| Link Real Estate |
Lithium Americas and Link Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Link Real
The main advantage of trading using opposite Lithium Americas and Link Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Link Real 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 Link Real will offset losses from the drop in Link Real's long position.| Lithium Americas vs. Link Real Estate | Lithium Americas vs. Zoom Video Communications | Lithium Americas vs. Sun Life Financial | Lithium Americas vs. Willscot Mobile Mini |
| Link Real vs. Kimco Realty | Link Real vs. Simon Property Group | Link Real vs. Saul Centers | Link Real vs. Kimco Realty |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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