Correlation Between United Fire and Lithium Americas

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

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

Diversification Opportunities for United Fire and Lithium Americas

-0.13

Correlation Coefficient

United Fire  Lithium Americas

Good diversification

The 3 months correlation between United and Lithium is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Lithium Americas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Americas Corp and United Fire 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 United Fire Group are associated (or correlated) with Lithium Americas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Americas Corp has no effect on the direction of United Fire i.e., United Fire and Lithium Americas go up and down completely randomly.

Pair Corralation between United Fire and Lithium Americas

Given the investment horizon of 90 days United Fire Group is expected to generate 0.45 times more return on investment than Lithium Americas. However, United Fire Group is 2.23 times less risky than Lithium Americas. It trades about -0.08 of its potential returns per unit of risk. Lithium Americas Corp is currently generating about -0.06 per unit of risk. If you would invest  2,844  in United Fire Group on May 6, 2025 and sell it today you would lose (233.00) from holding United Fire Group or give up 8.19% of portfolio value over 90 days.

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

United Fire Group  vs.  Lithium Americas Corp

United Fire Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Fire Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with United Fire and Lithium Americas

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

The idea behind United Fire Group and Lithium Americas 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.