Correlation Between Lithium Americas and Griffon
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Griffon 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 Griffon 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 Griffon, you can compare the effects of market volatilities on Lithium Americas and Griffon 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 Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Griffon.
Diversification Opportunities for Lithium Americas and Griffon
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lithium and Griffon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon 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 Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of Lithium Americas i.e., Lithium Americas and Griffon go up and down completely randomly.
Pair Corralation between Lithium Americas and Griffon
Considering the 90-day investment horizon Lithium Americas Corp is expected to generate 1.99 times more return on investment than Griffon. However, Lithium Americas is 1.99 times more volatile than Griffon. It trades about 0.19 of its potential returns per unit of risk. Griffon is currently generating about 0.21 per unit of risk. If you would invest 317.00 in Lithium Americas Corp on October 23, 2024 and sell it today you would earn a total of 32.00 from holding Lithium Americas Corp or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Americas Corp vs. Griffon
Performance |
| Timeline |
| Lithium Americas Corp |
| Griffon |
Lithium Americas and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Griffon
The main advantage of trading using opposite Lithium Americas and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| Lithium Americas vs. Sigma Lithium Resources | Lithium Americas vs. Standard Lithium | Lithium Americas vs. Sayona Mining Limited | Lithium Americas vs. MP Materials Corp |
| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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