Correlation Between Lithium Americas and Eureka Acquisition
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Eureka Acquisition 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 Eureka Acquisition 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 Eureka Acquisition Corp, you can compare the effects of market volatilities on Lithium Americas and Eureka Acquisition 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 Eureka Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Eureka Acquisition.
Diversification Opportunities for Lithium Americas and Eureka Acquisition
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lithium and Eureka is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Eureka Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Acquisition Corp 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 Eureka Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Acquisition Corp has no effect on the direction of Lithium Americas i.e., Lithium Americas and Eureka Acquisition go up and down completely randomly.
Pair Corralation between Lithium Americas and Eureka Acquisition
Considering the 90-day investment horizon Lithium Americas Corp is expected to under-perform the Eureka Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Lithium Americas Corp is 18.02 times less risky than Eureka Acquisition. The stock trades about -0.01 of its potential returns per unit of risk. The Eureka Acquisition Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Eureka Acquisition Corp on December 12, 2024 and sell it today you would earn a total of 1,027 from holding Eureka Acquisition Corp or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 43.06% |
| Values | Daily Returns |
Lithium Americas Corp vs. Eureka Acquisition Corp
Performance |
| Timeline |
| Lithium Americas Corp |
| Eureka Acquisition Corp |
Lithium Americas and Eureka Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Eureka Acquisition
The main advantage of trading using opposite Lithium Americas and Eureka Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Eureka Acquisition 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 Eureka Acquisition will offset losses from the drop in Eureka Acquisition's long position.| Lithium Americas vs. Sigma Lithium Resources | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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