Correlation Between American Lithium and Brookfield Asset

Can any of the company-specific risk be diversified away by investing in both American Lithium and Brookfield Asset 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 Brookfield Asset 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 Brookfield Asset Management, you can compare the effects of market volatilities on American Lithium and Brookfield Asset 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 Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Brookfield Asset.

Diversification Opportunities for American Lithium and Brookfield Asset

-0.24

Correlation Coefficient

American Lithium  Brookfield Asset

Very good diversification

The 3 months correlation between American and Brookfield is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man 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 Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of American Lithium i.e., American Lithium and Brookfield Asset go up and down completely randomly.

Pair Corralation between American Lithium and Brookfield Asset

Given the investment horizon of 90 days American Lithium Corp is expected to generate 12.76 times more return on investment than Brookfield Asset. However, American Lithium is 12.76 times more volatile than Brookfield Asset Management. It trades about 0.06 of its potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.18 per unit of risk. If you would invest  53.00  in American Lithium Corp on September 15, 2024 and sell it today you would earn a total of  5.00  from holding American Lithium Corp or generate 9.43% return on investment over 90 days.

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

American Lithium Corp  vs.  Brookfield Asset Management

American Lithium Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Lithium Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, American Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Asset Man

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Brookfield Asset may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with American Lithium and Brookfield Asset

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

The idea behind American Lithium Corp and Brookfield Asset Management 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.