Correlation Between Lithium Americas and TMC The

Can any of the company-specific risk be diversified away by investing in both Lithium Americas and TMC The 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 TMC The 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 TMC the metals, you can compare the effects of market volatilities on Lithium Americas and TMC The 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 TMC The. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and TMC The.

Diversification Opportunities for Lithium Americas and TMC The

-0.02

Correlation Coefficient

Lithium Americas  TMC The

Good diversification

The 3 months correlation between Lithium and TMC is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and TMC the metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMC the 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 TMC The. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMC the metals has no effect on the direction of Lithium Americas i.e., Lithium Americas and TMC The go up and down completely randomly.

Pair Corralation between Lithium Americas and TMC The

Considering the 90-day investment horizon Lithium Americas is expected to generate 10.38 times less return on investment than TMC The. But when comparing it to its historical volatility, Lithium Americas Corp is 2.37 times less risky than TMC The. It trades about 0.03 of its potential returns per unit of risk. TMC the metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  178.00  in TMC the metals on February 3, 2025 and sell it today you would earn a total of  120.00  from holding TMC the metals or generate 67.42% return on investment over 90 days.

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

Lithium Americas Corp  vs.  TMC the metals

Lithium Americas Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lithium Americas Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Lithium Americas may actually be approaching a critical reversion point that can send shares even higher in June 2025.

TMC the metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TMC the metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, TMC The exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lithium Americas and TMC The

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

The idea behind Lithium Americas Corp and TMC the metals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.