Correlation Between Voltage Metals and Eramet SA

Can any of the company-specific risk be diversified away by investing in both Voltage Metals 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 Voltage Metals and Eramet SA 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 Eramet SA ADR, you can compare the effects of market volatilities on Voltage Metals 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 Voltage Metals with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voltage Metals and Eramet SA.

Diversification Opportunities for Voltage Metals and Eramet SA

-0.43

Correlation Coefficient

Voltage Metals  Eramet SA

Very good diversification

The 3 months correlation between Voltage and Eramet is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Voltage Metals 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 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 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 Voltage Metals i.e., Voltage Metals and Eramet SA go up and down completely randomly.

Pair Corralation between Voltage Metals and Eramet SA

Assuming the 90 days horizon Voltage Metals Corp is expected to under-perform the Eramet SA. In addition to that, Voltage Metals is 2.96 times more volatile than Eramet SA ADR. It trades about -0.17 of its total potential returns per unit of risk. Eramet SA ADR is currently generating about 0.04 per unit of volatility. If you would invest  549.00  in Eramet SA ADR on December 30, 2024 and sell it today you would earn a total of  28.00  from holding Eramet SA ADR or generate 5.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Voltage Metals Corp  vs.  Eramet SA ADR

Voltage Metals Corp

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eramet SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eramet SA ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Eramet SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Voltage Metals and Eramet SA

The main advantage of trading using opposite Voltage Metals and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voltage Metals 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.

The idea behind Voltage Metals Corp and Eramet SA ADR 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.