Correlation Between Lithium Americas and Brixton Metals
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Brixton Metals 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 Brixton Metals 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 Brixton Metals, you can compare the effects of market volatilities on Lithium Americas and Brixton Metals 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 Brixton Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Brixton Metals.
Diversification Opportunities for Lithium Americas and Brixton Metals
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lithium and Brixton is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Brixton Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixton Metals 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 Brixton Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixton Metals has no effect on the direction of Lithium Americas i.e., Lithium Americas and Brixton Metals go up and down completely randomly.
Pair Corralation between Lithium Americas and Brixton Metals
Assuming the 90 days trading horizon Lithium Americas Corp is expected to generate 1.18 times more return on investment than Brixton Metals. However, Lithium Americas is 1.18 times more volatile than Brixton Metals. It trades about 0.11 of its potential returns per unit of risk. Brixton Metals is currently generating about -0.06 per unit of risk. If you would invest 315.00 in Lithium Americas Corp on September 23, 2024 and sell it today you would earn a total of 112.00 from holding Lithium Americas Corp or generate 35.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lithium Americas Corp vs. Brixton Metals
Performance |
Timeline |
Lithium Americas Corp |
Brixton Metals |
Lithium Americas and Brixton Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lithium Americas and Brixton Metals
The main advantage of trading using opposite Lithium Americas and Brixton Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Brixton Metals 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 Brixton Metals will offset losses from the drop in Brixton Metals' 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 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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