Correlation Between Lithium Americas and Manganese
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Manganese 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 Manganese 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 Manganese X Energy, you can compare the effects of market volatilities on Lithium Americas and Manganese 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 Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Manganese.
Diversification Opportunities for Lithium Americas and Manganese
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lithium and Manganese is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Manganese X Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manganese X Energy 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 Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manganese X Energy has no effect on the direction of Lithium Americas i.e., Lithium Americas and Manganese go up and down completely randomly.
Pair Corralation between Lithium Americas and Manganese
Considering the 90-day investment horizon Lithium Americas Corp is expected to under-perform the Manganese. But the stock apears to be less risky and, when comparing its historical volatility, Lithium Americas Corp is 2.12 times less risky than Manganese. The stock trades about -0.02 of its potential returns per unit of risk. The Manganese X Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2.70 in Manganese X Energy on August 29, 2024 and sell it today you would lose (0.23) from holding Manganese X Energy or give up 8.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Americas Corp vs. Manganese X Energy
Performance |
| Timeline |
| Lithium Americas Corp |
| Manganese X Energy |
Lithium Americas and Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Manganese
The main advantage of trading using opposite Lithium Americas and Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Manganese 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 Manganese will offset losses from the drop in Manganese'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 |
| Manganese vs. Talon Metals Corp | Manganese vs. Electra Battery Materials | Manganese vs. Lithium Americas Corp | Manganese vs. New Age Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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