Correlation Between Lithium Americas and Titan America

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

Diversification Opportunities for Lithium Americas and Titan America

-0.05

Correlation Coefficient

Lithium Americas  Titan America

Good diversification

The 3 months correlation between Lithium and Titan is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Titan America SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan America SA 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 Titan America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan America SA has no effect on the direction of Lithium Americas i.e., Lithium Americas and Titan America go up and down completely randomly.

Pair Corralation between Lithium Americas and Titan America

Considering the 90-day investment horizon Lithium Americas Corp is expected to generate 1.25 times more return on investment than Titan America. However, Lithium Americas is 1.25 times more volatile than Titan America SA. It trades about -0.07 of its potential returns per unit of risk. Titan America SA is currently generating about -0.16 per unit of risk. If you would invest  339.00  in Lithium Americas Corp on January 15, 2025 and sell it today you would lose (76.00) from holding Lithium Americas Corp or give up 22.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

Lithium Americas Corp  vs.  Titan America SA

Lithium Americas Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lithium Americas Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Titan America SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Titan America SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Lithium Americas and Titan America

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

The idea behind Lithium Americas Corp and Titan America SA 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.