Correlation Between Québec Nickel and American Lithium
Can any of the company-specific risk be diversified away by investing in both Québec Nickel 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 Québec Nickel and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qubec Nickel Corp and American Lithium Minerals, you can compare the effects of market volatilities on Québec Nickel 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 Québec Nickel with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Québec Nickel and American Lithium.
Diversification Opportunities for Québec Nickel and American Lithium
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Québec and American is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and American Lithium Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Minerals and Québec Nickel 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 Qubec Nickel Corp 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 Minerals has no effect on the direction of Québec Nickel i.e., Québec Nickel and American Lithium go up and down completely randomly.
Pair Corralation between Québec Nickel and American Lithium
Assuming the 90 days horizon Qubec Nickel Corp is expected to generate 2.34 times more return on investment than American Lithium. However, Québec Nickel is 2.34 times more volatile than American Lithium Minerals. It trades about 0.09 of its potential returns per unit of risk. American Lithium Minerals is currently generating about 0.1 per unit of risk. If you would invest 14.00 in Qubec Nickel Corp on October 26, 2024 and sell it today you would earn a total of 2.00 from holding Qubec Nickel Corp or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.64% |
| Values | Daily Returns |
Qubec Nickel Corp vs. American Lithium Minerals
Performance |
| Timeline |
| Qubec Nickel Corp |
| American Lithium Minerals |
Québec Nickel and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Québec Nickel and American Lithium
The main advantage of trading using opposite Québec Nickel and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Québec Nickel 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.| Québec Nickel vs. Norra Metals Corp | Québec Nickel vs. E79 Resources Corp | Québec Nickel vs. Voltage Metals Corp | Québec Nickel vs. Cantex Mine Development |
| American Lithium vs. Artemis Resources | American Lithium vs. St Georges Eco Mining Corp | American Lithium vs. Atco Mining | American Lithium vs. Avarone Metals |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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