Correlation Between American Lithium and Highwood Asset
Can any of the company-specific risk be diversified away by investing in both American Lithium and Highwood Asset 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 American Lithium and Highwood Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Lithium Corp and Highwood Asset Management, you can compare the effects of market volatilities on American Lithium and Highwood Asset 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 American Lithium with a short position of Highwood Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Highwood Asset.
Diversification Opportunities for American Lithium and Highwood Asset
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Highwood is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Highwood Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwood Asset Management and American 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 American Lithium Corp are associated (or correlated) with Highwood Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwood Asset Management has no effect on the direction of American Lithium i.e., American Lithium and Highwood Asset go up and down completely randomly.
Pair Corralation between American Lithium and Highwood Asset
Given the investment horizon of 90 days American Lithium is expected to generate 3.08 times less return on investment than Highwood Asset. In addition to that, American Lithium is 1.12 times more volatile than Highwood Asset Management. It trades about 0.03 of its total potential returns per unit of risk. Highwood Asset Management is currently generating about 0.11 per unit of volatility. If you would invest 600.00 in Highwood Asset Management on March 4, 2024 and sell it today you would earn a total of 35.00 from holding Highwood Asset Management or generate 5.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Lithium Corp vs. Highwood Asset Management
Performance |
Timeline |
American Lithium Corp |
Highwood Asset Management |
American Lithium and Highwood Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Lithium and Highwood Asset
The main advantage of trading using opposite American Lithium and Highwood Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Highwood Asset 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 Highwood Asset will offset losses from the drop in Highwood Asset's long position.American Lithium vs. BTU Metals Corp | American Lithium vs. GoldOn Resources | American Lithium vs. Kore Mining |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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