Correlation Between Lithium Americas and Invesco Multi

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

Diversification Opportunities for Lithium Americas and Invesco Multi

0.48

Correlation Coefficient

Lithium Americas  Invesco Multi

Very weak diversification

The 3 months correlation between Lithium and Invesco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Invesco Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Multi Asset 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 Invesco Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Multi Asset has no effect on the direction of Lithium Americas i.e., Lithium Americas and Invesco Multi go up and down completely randomly.

Pair Corralation between Lithium Americas and Invesco Multi

Considering the 90-day investment horizon Lithium Americas Corp is expected to under-perform the Invesco Multi. In addition to that, Lithium Americas is 7.16 times more volatile than Invesco Multi Asset Income. It trades about -0.18 of its total potential returns per unit of risk. Invesco Multi Asset Income is currently generating about 0.33 per unit of volatility. If you would invest  762.00  in Invesco Multi Asset Income on February 21, 2024 and sell it today you would earn a total of  20.00  from holding Invesco Multi Asset Income or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Lithium Americas Corp  vs.  Invesco Multi Asset Income

Lithium Americas Corp

Risk-Adjusted Performance

2 of 100

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 weak basic indicators, Lithium Americas may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Invesco Multi Asset

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Multi Asset Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Invesco Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lithium Americas and Invesco Multi

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

The idea behind Lithium Americas Corp and Invesco Multi Asset Income 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.