Correlation Between Skeena Resources and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Skeena Resources 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 Skeena Resources and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skeena Resources and Lithium Americas Corp, you can compare the effects of market volatilities on Skeena Resources 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 Skeena Resources with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skeena Resources and Lithium Americas.
Diversification Opportunities for Skeena Resources and Lithium Americas
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skeena and Lithium is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Skeena Resources 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 Skeena 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 Skeena Resources 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 Skeena Resources i.e., Skeena Resources and Lithium Americas go up and down completely randomly.
Pair Corralation between Skeena Resources and Lithium Americas
Assuming the 90 days trading horizon Skeena Resources is expected to under-perform the Lithium Americas. In addition to that, Skeena Resources is 1.08 times more volatile than Lithium Americas Corp. It trades about -0.01 of its total potential returns per unit of risk. Lithium Americas Corp is currently generating about 0.0 per unit of volatility. If you would invest 484.00 in Lithium Americas Corp on September 1, 2024 and sell it today you would lose (5.00) from holding Lithium Americas Corp or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skeena Resources vs. Lithium Americas Corp
Performance |
| Timeline |
| Skeena Resources |
| Lithium Americas Corp |
Skeena Resources and Lithium Americas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skeena Resources and Lithium Americas
The main advantage of trading using opposite Skeena Resources and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skeena Resources 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.The idea behind Skeena Resources and Lithium Americas Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lithium Americas vs. Medical Facilities | Lithium Americas vs. Ocumetics Technology Corp | Lithium Americas vs. Birchtech Corp | Lithium Americas vs. High Liner Foods |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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