Correlation Between Volt Lithium and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Volt Lithium and Eramet SA 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 Volt Lithium and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volt Lithium Corp and Eramet SA ADR, you can compare the effects of market volatilities on Volt Lithium and Eramet SA 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 Volt Lithium with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volt Lithium and Eramet SA.
Diversification Opportunities for Volt Lithium and Eramet SA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Volt and Eramet is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Volt Lithium Corp and Eramet SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA ADR and Volt Lithium 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 Volt Lithium Corp are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA ADR has no effect on the direction of Volt Lithium i.e., Volt Lithium and Eramet SA go up and down completely randomly.
Pair Corralation between Volt Lithium and Eramet SA
Assuming the 90 days horizon Volt Lithium Corp is expected to generate 2.35 times more return on investment than Eramet SA. However, Volt Lithium is 2.35 times more volatile than Eramet SA ADR. It trades about 0.06 of its potential returns per unit of risk. Eramet SA ADR is currently generating about -0.17 per unit of risk. If you would invest 17.00 in Volt Lithium Corp on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Volt Lithium Corp or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volt Lithium Corp vs. Eramet SA ADR
Performance |
| Timeline |
| Volt Lithium Corp |
| Eramet SA ADR |
Volt Lithium and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volt Lithium and Eramet SA
The main advantage of trading using opposite Volt Lithium and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volt Lithium position performs unexpectedly, Eramet SA 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 Eramet SA will offset losses from the drop in Eramet SA's long position.| Volt Lithium vs. Legacy Education | Volt Lithium vs. Apple Inc | Volt Lithium vs. NVIDIA | Volt Lithium vs. Microsoft |
| Eramet SA vs. IGO Limited | Eramet SA vs. Nickel Mines Limited | Eramet SA vs. IGO Limited | Eramet SA vs. Edison Cobalt 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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