Correlation Between Rockridge Resources and Ameriwest Lithium
Can any of the company-specific risk be diversified away by investing in both Rockridge Resources and Ameriwest 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 Rockridge Resources and Ameriwest Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockridge Resources and Ameriwest Lithium, you can compare the effects of market volatilities on Rockridge Resources and Ameriwest 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 Rockridge Resources with a short position of Ameriwest Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockridge Resources and Ameriwest Lithium.
Diversification Opportunities for Rockridge Resources and Ameriwest Lithium
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rockridge and Ameriwest is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Rockridge Resources and Ameriwest Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriwest Lithium and Rockridge 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 Rockridge Resources are associated (or correlated) with Ameriwest Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriwest Lithium has no effect on the direction of Rockridge Resources i.e., Rockridge Resources and Ameriwest Lithium go up and down completely randomly.
Pair Corralation between Rockridge Resources and Ameriwest Lithium
Assuming the 90 days horizon Rockridge Resources is expected to under-perform the Ameriwest Lithium. In addition to that, Rockridge Resources is 1.26 times more volatile than Ameriwest Lithium. It trades about -0.11 of its total potential returns per unit of risk. Ameriwest Lithium is currently generating about -0.02 per unit of volatility. If you would invest 12.00 in Ameriwest Lithium on August 29, 2024 and sell it today you would lose (1.00) from holding Ameriwest Lithium or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rockridge Resources vs. Ameriwest Lithium
Performance |
| Timeline |
| Rockridge Resources |
| Ameriwest Lithium |
Rockridge Resources and Ameriwest Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockridge Resources and Ameriwest Lithium
The main advantage of trading using opposite Rockridge Resources and Ameriwest Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockridge Resources position performs unexpectedly, Ameriwest 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 Ameriwest Lithium will offset losses from the drop in Ameriwest Lithium's long position.| Rockridge Resources vs. Vital Metals Limited | Rockridge Resources vs. Ameriwest Lithium | Rockridge Resources vs. Osisko Metals Incorporated | Rockridge Resources vs. Volt Lithium Corp |
| Ameriwest Lithium vs. Starr Peak Exploration | Ameriwest Lithium vs. American Lithium Corp | Ameriwest Lithium vs. Global Helium Corp | Ameriwest Lithium vs. Alpha 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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