Correlation Between Excelsior Mining and Lithium Americas

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

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

Diversification Opportunities for Excelsior Mining and Lithium Americas

-0.44

Correlation Coefficient

Excelsior Mining  Lithium Americas

Very good diversification

The 3 months correlation between Excelsior and Lithium is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Mining 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 Excelsior Mining 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 Excelsior Mining 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 Excelsior Mining i.e., Excelsior Mining and Lithium Americas go up and down completely randomly.

Pair Corralation between Excelsior Mining and Lithium Americas

Assuming the 90 days trading horizon Excelsior Mining Corp is expected to generate 1.58 times more return on investment than Lithium Americas. However, Excelsior Mining is 1.58 times more volatile than Lithium Americas Corp. It trades about 0.04 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.05 per unit of risk. If you would invest  16.00  in Excelsior Mining Corp on October 5, 2024 and sell it today you would earn a total of  5.00  from holding Excelsior Mining Corp or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

Excelsior Mining Corp  vs.  Lithium Americas Corp

Excelsior Mining Corp

Risk-Adjusted Performance

4 of 100

Insignificant

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

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Excelsior Mining and Lithium Americas

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

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.