Correlation Between American Lithium and FPX Nickel
Can any of the company-specific risk be diversified away by investing in both American Lithium and FPX Nickel 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 American Lithium and FPX Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Lithium Corp and FPX Nickel Corp, you can compare the effects of market volatilities on American Lithium and FPX Nickel 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 American Lithium with a short position of FPX Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and FPX Nickel.
Diversification Opportunities for American Lithium and FPX Nickel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and FPX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and FPX Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPX Nickel Corp and American Lithium 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 American Lithium Corp are associated (or correlated) with FPX Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPX Nickel Corp has no effect on the direction of American Lithium i.e., American Lithium and FPX Nickel go up and down completely randomly.
Pair Corralation between American Lithium and FPX Nickel
Given the investment horizon of 90 days American Lithium Corp is expected to under-perform the FPX Nickel. In addition to that, American Lithium is 1.21 times more volatile than FPX Nickel Corp. It trades about -0.03 of its total potential returns per unit of risk. FPX Nickel Corp is currently generating about -0.03 per unit of volatility. If you would invest 57.00 in FPX Nickel Corp on August 31, 2024 and sell it today you would lose (33.00) from holding FPX Nickel Corp or give up 57.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Lithium Corp vs. FPX Nickel Corp
Performance |
| Timeline |
| American Lithium Corp |
| FPX Nickel Corp |
American Lithium and FPX Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and FPX Nickel
The main advantage of trading using opposite American Lithium and FPX Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, FPX Nickel 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 FPX Nickel will offset losses from the drop in FPX Nickel's long position.| American Lithium vs. TUT Fitness Group | American Lithium vs. DRI Healthcare Trust | American Lithium vs. Pollard Banknote Limited | American Lithium vs. iA Financial |
| FPX Nickel vs. Diamond Estates Wines | FPX Nickel vs. Solid Impact Investments | FPX Nickel vs. Data Communications Management | FPX Nickel vs. Diversified Royalty Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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