Correlation Between Ameriwest Lithium and Amarc Resources

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

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

Diversification Opportunities for Ameriwest Lithium and Amarc Resources

-0.48

Correlation Coefficient

Ameriwest Lithium  Amarc Resources

Very good diversification

The 3 months correlation between Ameriwest and Amarc is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ameriwest Lithium and Amarc Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarc Resources and Ameriwest 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 Ameriwest Lithium are associated (or correlated) with Amarc Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarc Resources has no effect on the direction of Ameriwest Lithium i.e., Ameriwest Lithium and Amarc Resources go up and down completely randomly.

Pair Corralation between Ameriwest Lithium and Amarc Resources

Assuming the 90 days horizon Ameriwest Lithium is expected to under-perform the Amarc Resources. In addition to that, Ameriwest Lithium is 1.07 times more volatile than Amarc Resources. It trades about -0.03 of its total potential returns per unit of risk. Amarc Resources is currently generating about 0.1 per unit of volatility. If you would invest  10.00  in Amarc Resources on August 31, 2024 and sell it today you would earn a total of  3.00  from holding Amarc Resources or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ameriwest Lithium  vs.  Amarc Resources

Ameriwest Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameriwest Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Amarc Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amarc Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Amarc Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriwest Lithium and Amarc Resources

The main advantage of trading using opposite Ameriwest Lithium and Amarc Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriwest Lithium position performs unexpectedly, Amarc Resources 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 Amarc Resources will offset losses from the drop in Amarc Resources' long position.

The idea behind Ameriwest Lithium and Amarc Resources 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.