Correlation Between Lithium Americas and Western Copper
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Western Copper 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 Western Copper 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 Western Copper and, you can compare the effects of market volatilities on Lithium Americas and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Western Copper.
Diversification Opportunities for Lithium Americas and Western Copper
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lithium and Western is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Lithium Americas i.e., Lithium Americas and Western Copper go up and down completely randomly.
Pair Corralation between Lithium Americas and Western Copper
Considering the 90-day investment horizon Lithium Americas Corp is expected to generate 2.1 times more return on investment than Western Copper. However, Lithium Americas is 2.1 times more volatile than Western Copper and. It trades about 0.18 of its potential returns per unit of risk. Western Copper and is currently generating about 0.01 per unit of risk. If you would invest 227.00 in Lithium Americas Corp on August 31, 2024 and sell it today you would earn a total of 168.00 from holding Lithium Americas Corp or generate 74.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Americas Corp vs. Western Copper and
Performance |
| Timeline |
| Lithium Americas Corp |
| Western Copper |
Lithium Americas and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Western Copper
The main advantage of trading using opposite Lithium Americas and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.| Lithium Americas vs. Piedmont Lithium Ltd | Lithium Americas vs. Sigma Lithium Resources | Lithium Americas vs. Standard Lithium | Lithium Americas vs. Vale SA ADR |
| Western Copper vs. Fury Gold Mines | Western Copper vs. EMX Royalty Corp | Western Copper vs. Nevada King Gold | Western Copper vs. Aftermath Silver |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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