Correlation Between American Lithium and Ameriwest Lithium

Can any of the company-specific risk be diversified away by investing in both American Lithium 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 American Lithium and Ameriwest Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Lithium Corp and Ameriwest Lithium, you can compare the effects of market volatilities on American Lithium 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 American Lithium with a short position of Ameriwest Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Ameriwest Lithium.

Diversification Opportunities for American Lithium and Ameriwest Lithium

0.0

Correlation Coefficient

American Lithium  Ameriwest Lithium

Pay attention - limited upside

The 3 months correlation between American and Ameriwest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Ameriwest Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriwest Lithium and American Lithium 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 American Lithium Corp 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 American Lithium i.e., American Lithium and Ameriwest Lithium go up and down completely randomly.

Pair Corralation between American Lithium and Ameriwest Lithium

If you would invest  11.00  in Ameriwest Lithium on November 20, 2024 and sell it today you would lose (1.31) from holding Ameriwest Lithium or give up 11.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Lithium Corp  vs.  Ameriwest Lithium

American Lithium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, American Lithium is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Ameriwest Lithium

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriwest Lithium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Ameriwest Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Lithium and Ameriwest Lithium

The main advantage of trading using opposite American Lithium and Ameriwest Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium 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.

The idea behind American Lithium Corp and Ameriwest Lithium 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.