Correlation Between Aldel Financial and Lithium Americas
Can any of the company-specific risk be diversified away by investing in both Aldel Financial 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 Aldel Financial and Lithium Americas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and Lithium Americas Corp, you can compare the effects of market volatilities on Aldel Financial 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 Aldel Financial with a short position of Lithium Americas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Lithium Americas.
Diversification Opportunities for Aldel Financial and Lithium Americas
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aldel and Lithium is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II 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 Aldel Financial 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 Aldel Financial II 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 Aldel Financial i.e., Aldel Financial and Lithium Americas go up and down completely randomly.
Pair Corralation between Aldel Financial and Lithium Americas
Given the investment horizon of 90 days Aldel Financial II is expected to generate 0.04 times more return on investment than Lithium Americas. However, Aldel Financial II is 26.6 times less risky than Lithium Americas. It trades about 0.12 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.22 per unit of risk. If you would invest 990.00 in Aldel Financial II on October 4, 2024 and sell it today you would earn a total of 2.00 from holding Aldel Financial II or generate 0.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 61.9% |
Values | Daily Returns |
Aldel Financial II vs. Lithium Americas Corp
Performance |
Timeline |
Aldel Financial II |
Lithium Americas Corp |
Aldel Financial and Lithium Americas Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aldel Financial and Lithium Americas
The main advantage of trading using opposite Aldel Financial and Lithium Americas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial 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.Aldel Financial vs. Celsius Holdings | Aldel Financial vs. Penn National Gaming | Aldel Financial vs. NetEase | Aldel Financial vs. China Tontine Wines |
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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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