Correlation Between Focus Graphite and Volt Lithium
Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Volt Lithium 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 Focus Graphite and Volt Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Volt Lithium Corp, you can compare the effects of market volatilities on Focus Graphite and Volt Lithium 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 Focus Graphite with a short position of Volt Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Volt Lithium.
Diversification Opportunities for Focus Graphite and Volt Lithium
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Focus and Volt is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Volt Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volt Lithium Corp and Focus Graphite 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 Focus Graphite are associated (or correlated) with Volt Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volt Lithium Corp has no effect on the direction of Focus Graphite i.e., Focus Graphite and Volt Lithium go up and down completely randomly.
Pair Corralation between Focus Graphite and Volt Lithium
Assuming the 90 days horizon Focus Graphite is expected to generate 2.3 times more return on investment than Volt Lithium. However, Focus Graphite is 2.3 times more volatile than Volt Lithium Corp. It trades about 0.02 of its potential returns per unit of risk. Volt Lithium Corp is currently generating about -0.36 per unit of risk. If you would invest 6.00 in Focus Graphite on September 1, 2024 and sell it today you would lose (0.34) from holding Focus Graphite or give up 5.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Graphite vs. Volt Lithium Corp
Performance |
| Timeline |
| Focus Graphite |
| Volt Lithium Corp |
Focus Graphite and Volt Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Graphite and Volt Lithium
The main advantage of trading using opposite Focus Graphite and Volt Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Volt Lithium 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 Volt Lithium will offset losses from the drop in Volt Lithium's long position.| Focus Graphite vs. Northern Graphite | Focus Graphite vs. Syrah Resources Limited | Focus Graphite vs. Altura Mining Limited | Focus Graphite vs. Vulcan Minerals |
| Volt Lithium vs. Legacy Education | Volt Lithium vs. Apple Inc | Volt Lithium vs. NVIDIA | Volt Lithium vs. Microsoft |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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