Correlation Between Meteoric Resources and American Lithium
Can any of the company-specific risk be diversified away by investing in both Meteoric Resources 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 Meteoric Resources and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meteoric Resources NL and American Lithium Corp, you can compare the effects of market volatilities on Meteoric Resources 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 Meteoric Resources with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meteoric Resources and American Lithium.
Diversification Opportunities for Meteoric Resources and American Lithium
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meteoric and American is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Meteoric Resources NL 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 Meteoric Resources 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 Meteoric Resources NL 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 Meteoric Resources i.e., Meteoric Resources and American Lithium go up and down completely randomly.
Pair Corralation between Meteoric Resources and American Lithium
Assuming the 90 days horizon Meteoric Resources NL is expected to generate 2.32 times more return on investment than American Lithium. However, Meteoric Resources is 2.32 times more volatile than American Lithium Corp. It trades about 0.08 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.01 per unit of risk. If you would invest 2.40 in Meteoric Resources NL on September 12, 2024 and sell it today you would earn a total of 3.10 from holding Meteoric Resources NL or generate 129.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meteoric Resources NL vs. American Lithium Corp
Performance |
| Timeline |
| Meteoric Resources |
| American Lithium Corp |
Meteoric Resources and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meteoric Resources and American Lithium
The main advantage of trading using opposite Meteoric Resources and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meteoric Resources 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.| Meteoric Resources vs. American Lithium Corp | Meteoric Resources vs. ADRIATIC METALS LS 013355 | Meteoric Resources vs. Superior Plus Corp | Meteoric Resources vs. SIVERS SEMICONDUCTORS AB |
| American Lithium vs. Standard Lithium | American Lithium vs. BYD Company Limited | American Lithium vs. Rock Tech Lithium |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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