Correlation Between Voltage Metals and West Mining

Can any of the company-specific risk be diversified away by investing in both Voltage Metals and West Mining 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 Voltage Metals and West Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Voltage Metals Corp and West Mining Corp, you can compare the effects of market volatilities on Voltage Metals and West Mining 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 Voltage Metals with a short position of West Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voltage Metals and West Mining.

Diversification Opportunities for Voltage Metals and West Mining

0.0

Correlation Coefficient

Voltage Metals  West Mining

Pay attention - limited upside

The 3 months correlation between Voltage and West is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Voltage Metals Corp and West Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Mining Corp and Voltage Metals 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 Voltage Metals Corp are associated (or correlated) with West Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Mining Corp has no effect on the direction of Voltage Metals i.e., Voltage Metals and West Mining go up and down completely randomly.

Pair Corralation between Voltage Metals and West Mining

Assuming the 90 days horizon Voltage Metals Corp is expected to generate 2.46 times more return on investment than West Mining. However, Voltage Metals is 2.46 times more volatile than West Mining Corp. It trades about 0.06 of its potential returns per unit of risk. West Mining Corp is currently generating about 0.04 per unit of risk. If you would invest  1.00  in Voltage Metals Corp on September 1, 2024 and sell it today you would earn a total of  3.00  from holding Voltage Metals Corp or generate 300.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.51%
Values	Daily Returns

Voltage Metals Corp  vs.  West Mining Corp

Voltage Metals Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Voltage Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Voltage Metals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

West Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days West Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Voltage Metals and West Mining

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

The idea behind Voltage Metals Corp and West Mining Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.