Correlation Between Scotch Creek and Ameriwest Lithium
Can any of the company-specific risk be diversified away by investing in both Scotch Creek 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 Scotch Creek and Ameriwest Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scotch Creek Ventures and Ameriwest Lithium, you can compare the effects of market volatilities on Scotch Creek 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 Scotch Creek with a short position of Ameriwest Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotch Creek and Ameriwest Lithium.
Diversification Opportunities for Scotch Creek and Ameriwest Lithium
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scotch and Ameriwest is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Scotch Creek Ventures and Ameriwest Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriwest Lithium and Scotch Creek 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 Scotch Creek Ventures 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 Scotch Creek i.e., Scotch Creek and Ameriwest Lithium go up and down completely randomly.
Pair Corralation between Scotch Creek and Ameriwest Lithium
Assuming the 90 days horizon Scotch Creek Ventures is expected to under-perform the Ameriwest Lithium. In addition to that, Scotch Creek is 1.28 times more volatile than Ameriwest Lithium. It trades about -0.06 of its total potential returns per unit of risk. Ameriwest Lithium is currently generating about 0.03 per unit of volatility. If you would invest 7.16 in Ameriwest Lithium on November 5, 2024 and sell it today you would lose (0.66) from holding Ameriwest Lithium or give up 9.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Scotch Creek Ventures vs. Ameriwest Lithium
Performance |
| Timeline |
| Scotch Creek Ventures |
| Ameriwest Lithium |
Scotch Creek and Ameriwest Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scotch Creek and Ameriwest Lithium
The main advantage of trading using opposite Scotch Creek and Ameriwest Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotch Creek 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.| Scotch Creek vs. Alpha Copper Corp | Scotch Creek vs. American Rare Earths | Scotch Creek vs. Placer Creek Mining | Scotch Creek vs. Ameriwest Lithium |
| Ameriwest Lithium vs. Starr Peak Exploration | Ameriwest Lithium vs. Global Helium Corp | Ameriwest Lithium vs. Alpha Lithium | Ameriwest Lithium vs. United Lithium 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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