Correlation Between Lithium Australia and First American
Can any of the company-specific risk be diversified away by investing in both Lithium Australia and First American 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 Australia and First American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Australia NL and First American Silver, you can compare the effects of market volatilities on Lithium Australia and First American 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 Australia with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and First American.
Diversification Opportunities for Lithium Australia and First American
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lithium and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and First American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Silver and Lithium Australia 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 Australia NL are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Silver has no effect on the direction of Lithium Australia i.e., Lithium Australia and First American go up and down completely randomly.
Pair Corralation between Lithium Australia and First American
If you would invest 1.40 in Lithium Australia NL on August 29, 2024 and sell it today you would lose (0.25) from holding Lithium Australia NL or give up 17.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Australia NL vs. First American Silver
Performance |
| Timeline |
| Lithium Australia |
| First American Silver |
Lithium Australia and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Australia and First American
The main advantage of trading using opposite Lithium Australia and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Australia position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.| Lithium Australia vs. Grid Metals Corp | Lithium Australia vs. Latin Metals | Lithium Australia vs. First American Silver | Lithium Australia vs. IGO Limited |
| First American vs. Rockridge Resources | First American vs. Ameriwest Lithium | First American vs. Osisko Metals Incorporated | First American vs. Volt Lithium 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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