Correlation Between US Lithium and Leef Brands

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

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

Diversification Opportunities for US Lithium and Leef Brands

-0.09

Correlation Coefficient

US Lithium  Leef Brands

Good diversification

The 3 months correlation between LITH and Leef is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding US Lithium Corp and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands and US 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 US Lithium Corp are associated (or correlated) with Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of US Lithium i.e., US Lithium and Leef Brands go up and down completely randomly.

Pair Corralation between US Lithium and Leef Brands

Given the investment horizon of 90 days US Lithium Corp is expected to under-perform the Leef Brands. In addition to that, US Lithium is 1.87 times more volatile than Leef Brands. It trades about -0.22 of its total potential returns per unit of risk. Leef Brands is currently generating about 0.18 per unit of volatility. If you would invest  14.00  in Leef Brands on September 19, 2024 and sell it today you would earn a total of  4.00  from holding Leef Brands or generate 28.57% return on investment over 90 days.

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

US Lithium Corp  vs.  Leef Brands

US Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Leef Brands

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leef Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Leef Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Lithium and Leef Brands

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

The idea behind US Lithium Corp and Leef Brands 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.