Correlation Between Link Real and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Link Real and Lithium Americas 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 Link Real and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Real Estate and Lithium Americas Corp, you can compare the effects of market volatilities on Link Real and Lithium Americas 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 Link Real with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Real and Lithium Americas.
Diversification Opportunities for Link Real and Lithium Americas
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Link and Lithium is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp and Link Real 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 Link Real Estate are associated (or correlated) with Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of Link Real i.e., Link Real and Lithium Americas go up and down completely randomly.
Pair Corralation between Link Real and Lithium Americas
Assuming the 90 days horizon Link Real Estate is expected to generate 0.72 times more return on investment than Lithium Americas. However, Link Real Estate is 1.39 times less risky than Lithium Americas. It trades about 0.0 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.03 per unit of risk. If you would invest 478.00 in Link Real Estate on September 4, 2024 and sell it today you would lose (38.00) from holding Link Real Estate or give up 7.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.78% |
| Values | Daily Returns |
Link Real Estate vs. Lithium Americas Corp
Performance |
| Timeline |
| Link Real Estate |
| Lithium Americas Corp |
Link Real and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Real and Lithium Americas
The main advantage of trading using opposite Link Real and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Real position performs unexpectedly, Lithium Americas 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 Lithium Americas will offset losses from the drop in Lithium Americas' long position.| Link Real vs. Kimco Realty | Link Real vs. Simon Property Group | Link Real vs. Saul Centers | Link Real vs. Kimco Realty |
| Lithium Americas vs. Arrow Electronics | Lithium Americas vs. Minerals Technologies | Lithium Americas vs. Pintec Technology Holdings | Lithium Americas vs. Juniata Valley Financial |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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