Correlation Between Vale SA and Westwater Resources
Can any of the company-specific risk be diversified away by investing in both Vale SA and Westwater Resources 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 Vale SA and Westwater Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA ADR and Westwater Resources, you can compare the effects of market volatilities on Vale SA and Westwater Resources 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 Vale SA with a short position of Westwater Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Westwater Resources.
Diversification Opportunities for Vale SA and Westwater Resources
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vale and Westwater is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA ADR and Westwater Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwater Resources and Vale SA 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 Vale SA ADR are associated (or correlated) with Westwater Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwater Resources has no effect on the direction of Vale SA i.e., Vale SA and Westwater Resources go up and down completely randomly.
Pair Corralation between Vale SA and Westwater Resources
Given the investment horizon of 90 days Vale SA is expected to generate 70.92 times less return on investment than Westwater Resources. But when comparing it to its historical volatility, Vale SA ADR is 5.62 times less risky than Westwater Resources. It trades about 0.0 of its potential returns per unit of risk. Westwater Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Westwater Resources on December 4, 2024 and sell it today you would earn a total of 3.00 from holding Westwater Resources or generate 4.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Vale SA ADR vs. Westwater Resources
Performance |
Timeline |
Vale SA ADR |
Westwater Resources |
Vale SA and Westwater Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vale SA and Westwater Resources
The main advantage of trading using opposite Vale SA and Westwater Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Westwater Resources 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 Westwater Resources will offset losses from the drop in Westwater Resources' long position.Vale SA vs. BHP Group Limited | Vale SA vs. Teck Resources Ltd | Vale SA vs. Lithium Americas Corp | Vale SA vs. MP Materials Corp |
Westwater Resources vs. Mason Graphite | Westwater Resources vs. Northern Graphite | Westwater Resources vs. Graphite One | Westwater Resources vs. Lomiko Metals |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |