Correlation Between WELL Health and American Lithium
Can any of the company-specific risk be diversified away by investing in both WELL Health 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 WELL Health and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WELL Health Technologies and American Lithium Corp, you can compare the effects of market volatilities on WELL Health 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 WELL Health with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of WELL Health and American Lithium.
Diversification Opportunities for WELL Health and American Lithium
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WELL and American is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding WELL Health Technologies 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 WELL Health 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 WELL Health Technologies 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 WELL Health i.e., WELL Health and American Lithium go up and down completely randomly.
Pair Corralation between WELL Health and American Lithium
Assuming the 90 days trading horizon WELL Health Technologies is expected to generate 0.44 times more return on investment than American Lithium. However, WELL Health Technologies is 2.26 times less risky than American Lithium. 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 379.00 in WELL Health Technologies on August 29, 2024 and sell it today you would earn a total of 151.00 from holding WELL Health Technologies or generate 39.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WELL Health Technologies vs. American Lithium Corp
Performance |
| Timeline |
| WELL Health Technologies |
| American Lithium Corp |
WELL Health and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WELL Health and American Lithium
The main advantage of trading using opposite WELL Health and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WELL Health 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.| WELL Health vs. Solar Alliance Energy | WELL Health vs. Braille Energy Systems | WELL Health vs. MedMira | WELL Health vs. Lite Access Technologies |
| American Lithium vs. Cogeco Communications | American Lithium vs. NeXGold Mining Corp | American Lithium vs. iA Financial | American Lithium vs. Laurentian Bank |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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