Correlation Between Lithium Americas and Sun Lif
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Sun Lif 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 Sun Lif 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 Sun Lif Non, you can compare the effects of market volatilities on Lithium Americas and Sun Lif 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 Sun Lif. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Sun Lif.
Diversification Opportunities for Lithium Americas and Sun Lif
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lithium and Sun is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Sun Lif Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Lif Non 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 Sun Lif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Lif Non has no effect on the direction of Lithium Americas i.e., Lithium Americas and Sun Lif go up and down completely randomly.
Pair Corralation between Lithium Americas and Sun Lif
Assuming the 90 days trading horizon Lithium Americas Corp is expected to under-perform the Sun Lif. In addition to that, Lithium Americas is 4.36 times more volatile than Sun Lif Non. It trades about -0.33 of its total potential returns per unit of risk. Sun Lif Non is currently generating about 0.13 per unit of volatility. If you would invest 1,874 in Sun Lif Non on September 26, 2024 and sell it today you would earn a total of 35.00 from holding Sun Lif Non or generate 1.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lithium Americas Corp vs. Sun Lif Non
Performance |
Timeline |
Lithium Americas Corp |
Sun Lif Non |
Lithium Americas and Sun Lif Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lithium Americas and Sun Lif
The main advantage of trading using opposite Lithium Americas and Sun Lif positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Sun Lif 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 Sun Lif will offset losses from the drop in Sun Lif's long position.Lithium Americas vs. Monarca Minerals | Lithium Americas vs. Outcrop Gold Corp | Lithium Americas vs. Grande Portage Resources | Lithium Americas vs. Klondike Silver Corp |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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