Correlation Between Vulcan Energy and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Vulcan Energy and Core 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 Vulcan Energy and Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Energy Resources and Core Lithium, you can compare the effects of market volatilities on Vulcan Energy and Core 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 Vulcan Energy with a short position of Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Energy and Core Lithium.
Diversification Opportunities for Vulcan Energy and Core Lithium
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vulcan and Core is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Energy Resources and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium and Vulcan Energy 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 Vulcan Energy Resources are associated (or correlated) with Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Vulcan Energy i.e., Vulcan Energy and Core Lithium go up and down completely randomly.
Pair Corralation between Vulcan Energy and Core Lithium
Assuming the 90 days horizon Vulcan Energy Resources is expected to under-perform the Core Lithium. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vulcan Energy Resources is 3.4 times less risky than Core Lithium. The pink sheet trades about -0.26 of its potential returns per unit of risk. The Core Lithium is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Core Lithium on November 3, 2024 and sell it today you would earn a total of 1.27 from holding Core Lithium or generate 25.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vulcan Energy Resources vs. Core Lithium
Performance |
| Timeline |
| Vulcan Energy Resources |
| Core Lithium |
Vulcan Energy and Core Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Energy and Core Lithium
The main advantage of trading using opposite Vulcan Energy and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Energy position performs unexpectedly, Core 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 Core Lithium will offset losses from the drop in Core Lithium's long position.| Vulcan Energy vs. Core Lithium | Vulcan Energy vs. Patriot Battery Metals | Vulcan Energy vs. Lomiko Metals | Vulcan Energy vs. Snow Lake Resources |
| Core Lithium vs. Macmahon Holdings Limited | Core Lithium vs. Prime Meridian Resources | Core Lithium vs. International Lithium Corp | Core Lithium vs. Hudson Resources |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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