Correlation Between Wealth Minerals and American Lithium

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

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

Diversification Opportunities for Wealth Minerals and American Lithium

0.09

Correlation Coefficient

Wealth Minerals  American Lithium

Significant diversification

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

Pair Corralation between Wealth Minerals and American Lithium

Assuming the 90 days horizon Wealth Minerals is expected to under-perform the American Lithium. In addition to that, Wealth Minerals is 1.23 times more volatile than American Lithium Corp. It trades about -0.05 of its total potential returns per unit of risk. American Lithium Corp is currently generating about -0.04 per unit of volatility. If you would invest  280.00  in American Lithium Corp on September 21, 2024 and sell it today you would lose (229.00) from holding American Lithium Corp or give up 81.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Wealth Minerals  vs.  American Lithium Corp

Wealth Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wealth Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

American Lithium Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Lithium Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, American Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wealth Minerals and American Lithium

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

The idea behind Wealth Minerals and American Lithium 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.