Correlation Between Cornish Metals and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and Lithium Americas Corp, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Lithium Americas.
Diversification Opportunities for Cornish Metals and Lithium Americas
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cornish and Lithium is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals 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 Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and Lithium Americas go up and down completely randomly.
Pair Corralation between Cornish Metals and Lithium Americas
Assuming the 90 days horizon Cornish Metals is expected to generate 2.3 times more return on investment than Lithium Americas. However, Cornish Metals is 2.3 times more volatile than Lithium Americas Corp. It trades about 0.04 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about 0.04 per unit of risk. If you would invest 8.00 in Cornish Metals on August 25, 2024 and sell it today you would lose (2.00) from holding Cornish Metals or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. Lithium Americas Corp
Performance |
| Timeline |
| Cornish Metals |
| Lithium Americas Corp |
Cornish Metals and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and Lithium Americas
The main advantage of trading using opposite Cornish Metals and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. Ascendant Resources | Cornish Metals vs. Cantex Mine Development | Cornish Metals vs. Amarc Resources | Cornish Metals vs. Sterling Metals Corp |
| Lithium Americas vs. Vale SA ADR | Lithium Americas vs. Teck Resources Ltd | Lithium Americas vs. MP Materials Corp | Lithium Americas vs. BHP Group Limited |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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