Correlation Between Voltage Metals and Giga Metals

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

Diversification Opportunities for Voltage Metals and Giga Metals

0.0

Correlation Coefficient

Voltage Metals  Giga Metals

Pay attention - limited upside

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

Pair Corralation between Voltage Metals and Giga Metals

Assuming the 90 days horizon Voltage Metals Corp is expected to generate 4.89 times more return on investment than Giga Metals. However, Voltage Metals is 4.89 times more volatile than Giga Metals. It trades about 0.05 of its potential returns per unit of risk. Giga Metals is currently generating about 0.02 per unit of risk. If you would invest  9.54  in Voltage Metals Corp on February 1, 2024 and sell it today you would lose (6.25) from holding Voltage Metals Corp or give up 65.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	70.29%
Values	Daily Returns

Voltage Metals Corp  vs.  Giga Metals

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Giga Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Voltage Metals and Giga Metals

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

The idea behind Voltage Metals Corp and Giga Metals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.