Correlation Between Solitario Exploration and Lithium Americas

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

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

Diversification Opportunities for Solitario Exploration and Lithium Americas

0.0

Correlation Coefficient

Solitario Exploration  Lithium Americas

Pay attention - limited upside

The 3 months correlation between Solitario and Lithium is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solitario Exploration Royalty 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 Solitario Exploration 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 Solitario Exploration Royalty 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 Solitario Exploration i.e., Solitario Exploration and Lithium Americas go up and down completely randomly.

Pair Corralation between Solitario Exploration and Lithium Americas

If you would invest  60.00  in Solitario Exploration Royalty on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Solitario Exploration Royalty or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Solitario Exploration Royalty  vs.  Lithium Americas Corp

Solitario Exploration

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solitario Exploration Royalty are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Solitario Exploration is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Lithium Americas Corp

Risk-Adjusted Performance

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 rather sound basic indicators, Lithium Americas is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Solitario Exploration and Lithium Americas

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

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.