Correlation Between Ballys Corp and Lithium Americas

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

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

Diversification Opportunities for Ballys Corp and Lithium Americas

-0.71

Correlation Coefficient

Ballys Corp  Lithium Americas

Pay attention - limited upside

The 3 months correlation between Ballys and Lithium is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ballys Corp 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 Ballys Corp 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 Ballys Corp 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 Ballys Corp i.e., Ballys Corp and Lithium Americas go up and down completely randomly.

Pair Corralation between Ballys Corp and Lithium Americas

Given the investment horizon of 90 days Ballys Corp is expected to generate 0.08 times more return on investment than Lithium Americas. However, Ballys Corp is 12.28 times less risky than Lithium Americas. It trades about 0.14 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.03 per unit of risk. If you would invest  1,749  in Ballys Corp on October 10, 2024 and sell it today you would earn a total of  50.00  from holding Ballys Corp or generate 2.86% return on investment over 90 days.

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

Ballys Corp  vs.  Lithium Americas Corp

Ballys Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ballys Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Ballys Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Lithium Americas Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lithium Americas Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lithium Americas is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ballys Corp and Lithium Americas

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

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.