Correlation Between Lightspeed Commerce and American Lithium
Can any of the company-specific risk be diversified away by investing in both Lightspeed Commerce and American Lithium 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 Lightspeed Commerce and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lightspeed Commerce and American Lithium Corp, you can compare the effects of market volatilities on Lightspeed Commerce and American Lithium 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 Lightspeed Commerce with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lightspeed Commerce and American Lithium.
Diversification Opportunities for Lightspeed Commerce and American Lithium
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lightspeed and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lightspeed Commerce and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Lightspeed Commerce 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 Lightspeed Commerce are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Lightspeed Commerce i.e., Lightspeed Commerce and American Lithium go up and down completely randomly.
Pair Corralation between Lightspeed Commerce and American Lithium
Assuming the 90 days trading horizon Lightspeed Commerce is expected to generate 0.56 times more return on investment than American Lithium. However, Lightspeed Commerce is 1.77 times less risky than American Lithium. It trades about -0.2 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.14 per unit of risk. If you would invest 2,201 in Lightspeed Commerce on November 10, 2024 and sell it today you would lose (325.00) from holding Lightspeed Commerce or give up 14.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lightspeed Commerce vs. American Lithium Corp
Performance |
| Timeline |
| Lightspeed Commerce |
| American Lithium Corp |
Lightspeed Commerce and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lightspeed Commerce and American Lithium
The main advantage of trading using opposite Lightspeed Commerce and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lightspeed Commerce position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.| Lightspeed Commerce vs. Shopify | Lightspeed Commerce vs. WELL Health Technologies | Lightspeed Commerce vs. BlackBerry | Lightspeed Commerce vs. Docebo Inc |
| American Lithium vs. 2028 Investment Grade | American Lithium vs. Upstart Investments | American Lithium vs. Mako Mining Corp | American Lithium vs. Magna Mining |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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