Correlation Between Nouveau Monde and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Nouveau Monde 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 Nouveau Monde and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nouveau Monde Graphite and Lithium Americas Corp, you can compare the effects of market volatilities on Nouveau Monde 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 Nouveau Monde with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nouveau Monde and Lithium Americas.
Diversification Opportunities for Nouveau Monde and Lithium Americas
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nouveau and Lithium is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nouveau Monde Graphite 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 Nouveau Monde 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 Nouveau Monde Graphite 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 Nouveau Monde i.e., Nouveau Monde and Lithium Americas go up and down completely randomly.
Pair Corralation between Nouveau Monde and Lithium Americas
Considering the 90-day investment horizon Nouveau Monde Graphite is expected to generate 0.45 times more return on investment than Lithium Americas. However, Nouveau Monde Graphite is 2.2 times less risky than Lithium Americas. It trades about -0.24 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.11 per unit of risk. If you would invest 142.00 in Nouveau Monde Graphite on August 30, 2024 and sell it today you would lose (15.00) from holding Nouveau Monde Graphite or give up 10.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nouveau Monde Graphite vs. Lithium Americas Corp
Performance |
| Timeline |
| Nouveau Monde Graphite |
| Lithium Americas Corp |
Nouveau Monde and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nouveau Monde and Lithium Americas
The main advantage of trading using opposite Nouveau Monde and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nouveau Monde 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.| Nouveau Monde vs. Mason Graphite | Nouveau Monde vs. Northern Graphite | Nouveau Monde vs. Graphite One | Nouveau Monde vs. Lomiko Metals |
| Lithium Americas vs. Sigma Lithium Resources | Lithium Americas vs. Standard Lithium | Lithium Americas vs. Sayona Mining Limited | Lithium Americas vs. MP Materials 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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