Correlation Between Lithium Americas and Invesco Solar
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Invesco Solar 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 Invesco Solar 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 Invesco Solar ETF, you can compare the effects of market volatilities on Lithium Americas and Invesco Solar 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 Invesco Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Invesco Solar.
Diversification Opportunities for Lithium Americas and Invesco Solar
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lithium and Invesco is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Invesco Solar ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Solar ETF 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 Invesco Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Solar ETF has no effect on the direction of Lithium Americas i.e., Lithium Americas and Invesco Solar go up and down completely randomly.
Pair Corralation between Lithium Americas and Invesco Solar
Considering the 90-day investment horizon Lithium Americas Corp is expected to under-perform the Invesco Solar. In addition to that, Lithium Americas is 2.34 times more volatile than Invesco Solar ETF. It trades about -0.06 of its total potential returns per unit of risk. Invesco Solar ETF is currently generating about -0.06 per unit of volatility. If you would invest 6,972 in Invesco Solar ETF on August 28, 2024 and sell it today you would lose (3,367) from holding Invesco Solar ETF or give up 48.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.44% |
| Values | Daily Returns |
Lithium Americas Corp vs. Invesco Solar ETF
Performance |
| Timeline |
| Lithium Americas Corp |
| Invesco Solar ETF |
Lithium Americas and Invesco Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Invesco Solar
The main advantage of trading using opposite Lithium Americas and Invesco Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Invesco Solar 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 Invesco Solar will offset losses from the drop in Invesco Solar's long position.| Lithium Americas vs. Vale SA ADR | Lithium Americas vs. BHP Group Limited | Lithium Americas vs. Glencore PLC ADR | Lithium Americas vs. Piedmont Lithium Ltd |
| Invesco Solar vs. iShares Global Clean | Invesco Solar vs. Invesco WilderHill Clean | Invesco Solar vs. First Trust NASDAQ | Invesco Solar vs. Global X Lithium |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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