Correlation Between Lithium Americas and Guru Organic
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Guru Organic 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 Lithium Americas and Guru Organic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Americas Corp and Guru Organic Energy, you can compare the effects of market volatilities on Lithium Americas and Guru Organic 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 Lithium Americas with a short position of Guru Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Guru Organic.
Diversification Opportunities for Lithium Americas and Guru Organic
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lithium and Guru is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Guru Organic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Organic Energy and Lithium Americas 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 Lithium Americas Corp are associated (or correlated) with Guru Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Organic Energy has no effect on the direction of Lithium Americas i.e., Lithium Americas and Guru Organic go up and down completely randomly.
Pair Corralation between Lithium Americas and Guru Organic
Assuming the 90 days trading horizon Lithium Americas Corp is expected to generate 0.88 times more return on investment than Guru Organic. However, Lithium Americas Corp is 1.14 times less risky than Guru Organic. It trades about -0.07 of its potential returns per unit of risk. Guru Organic Energy is currently generating about -0.38 per unit of risk. If you would invest 441.00 in Lithium Americas Corp on October 7, 2024 and sell it today you would lose (26.00) from holding Lithium Americas Corp or give up 5.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Lithium Americas Corp vs. Guru Organic Energy
Performance |
Timeline |
Lithium Americas Corp |
Guru Organic Energy |
Lithium Americas and Guru Organic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lithium Americas and Guru Organic
The main advantage of trading using opposite Lithium Americas and Guru Organic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Guru Organic 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 Guru Organic will offset losses from the drop in Guru Organic's long position.Lithium Americas vs. Rocky Mountain Liquor | Lithium Americas vs. Renoworks Software | Lithium Americas vs. Ocumetics Technology Corp | Lithium Americas vs. Micron Technology, |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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