Correlation Between BHP Group and Voltage Metals
Can any of the company-specific risk be diversified away by investing in both BHP Group and Voltage Metals 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 BHP Group and Voltage Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Voltage Metals Corp, you can compare the effects of market volatilities on BHP Group and Voltage Metals 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 BHP Group with a short position of Voltage Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Voltage Metals.
Diversification Opportunities for BHP Group and Voltage Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BHP and Voltage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Voltage Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltage Metals Corp and BHP Group 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 BHP Group Limited are associated (or correlated) with Voltage Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltage Metals Corp has no effect on the direction of BHP Group i.e., BHP Group and Voltage Metals go up and down completely randomly.
Pair Corralation between BHP Group and Voltage Metals
Considering the 90-day investment horizon BHP Group Limited is expected to under-perform the Voltage Metals. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 13.63 times less risky than Voltage Metals. The stock trades about 0.0 of its potential returns per unit of risk. The Voltage Metals Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.88 in Voltage Metals Corp on August 29, 2024 and sell it today you would earn a total of 2.12 from holding Voltage Metals Corp or generate 112.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Voltage Metals Corp
Performance |
| Timeline |
| BHP Group Limited |
| Voltage Metals Corp |
BHP Group and Voltage Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Voltage Metals
The main advantage of trading using opposite BHP Group and Voltage Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Voltage Metals 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 Voltage Metals will offset losses from the drop in Voltage Metals' long position.| BHP Group vs. Vale SA ADR | BHP Group vs. Teck Resources Ltd | BHP Group vs. Lithium Americas Corp | BHP Group vs. MP Materials Corp |
| Voltage Metals vs. Rockridge Resources | Voltage Metals vs. Ameriwest Lithium | Voltage Metals vs. Osisko Metals Incorporated | Voltage Metals vs. Volt Lithium Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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