Correlation Between US Lithium and BC Bud
Can any of the company-specific risk be diversified away by investing in both US Lithium and BC Bud 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 US Lithium and BC Bud into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Lithium Corp and The BC Bud, you can compare the effects of market volatilities on US Lithium and BC Bud 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 US Lithium with a short position of BC Bud. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Lithium and BC Bud.
Diversification Opportunities for US Lithium and BC Bud
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LITH and BCBCF is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding US Lithium Corp and The BC Bud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Bud and US 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 US Lithium Corp are associated (or correlated) with BC Bud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Bud has no effect on the direction of US Lithium i.e., US Lithium and BC Bud go up and down completely randomly.
Pair Corralation between US Lithium and BC Bud
Given the investment horizon of 90 days US Lithium Corp is expected to under-perform the BC Bud. But the stock apears to be less risky and, when comparing its historical volatility, US Lithium Corp is 6.52 times less risky than BC Bud. The stock trades about -0.06 of its potential returns per unit of risk. The The BC Bud is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.50 in The BC Bud on November 3, 2024 and sell it today you would earn a total of 5.58 from holding The BC Bud or generate 372.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Lithium Corp vs. The BC Bud
Performance |
| Timeline |
| US Lithium Corp |
| BC Bud |
US Lithium and BC Bud Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Lithium and BC Bud
The main advantage of trading using opposite US Lithium and BC Bud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Lithium position performs unexpectedly, BC Bud 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 BC Bud will offset losses from the drop in BC Bud's long position.| US Lithium vs. Mc Endvrs | US Lithium vs. Kali Inc | US Lithium vs. One World Pharma | US Lithium vs. HempAmericana |
| BC Bud vs. Amexdrug | BC Bud vs. Crescita Therapeutics | BC Bud vs. Aion Therapeutic | BC Bud vs. Alterola Biotech |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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