Correlation Between American Lithium and WELL Health
Can any of the company-specific risk be diversified away by investing in both American Lithium and WELL Health 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 WELL Health 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 WELL Health Technologies, you can compare the effects of market volatilities on American Lithium and WELL Health 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 WELL Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and WELL Health.
Diversification Opportunities for American Lithium and WELL Health
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and WELL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and WELL Health Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELL Health Technologies 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 WELL Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELL Health Technologies has no effect on the direction of American Lithium i.e., American Lithium and WELL Health go up and down completely randomly.
Pair Corralation between American Lithium and WELL Health
Given the investment horizon of 90 days American Lithium Corp is expected to generate 1.91 times more return on investment than WELL Health. However, American Lithium is 1.91 times more volatile than WELL Health Technologies. It trades about -0.07 of its potential returns per unit of risk. WELL Health Technologies is currently generating about -0.21 per unit of risk. If you would invest 54.00 in American Lithium Corp on December 29, 2024 and sell it today you would lose (12.00) from holding American Lithium Corp or give up 22.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Lithium Corp vs. WELL Health Technologies
Performance |
Timeline |
American Lithium Corp |
WELL Health Technologies |
American Lithium and WELL Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Lithium and WELL Health
The main advantage of trading using opposite American Lithium and WELL Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, WELL Health 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 WELL Health will offset losses from the drop in WELL Health's long position.American Lithium vs. Calian Technologies | American Lithium vs. Brookfield Investments | American Lithium vs. Roadman Investments Corp | American Lithium vs. Xtract One Technologies |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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