Correlation Between Natural Alternatives and Volt Lithium

Can any of the company-specific risk be diversified away by investing in both Natural Alternatives and Volt 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 Natural Alternatives and Volt Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Natural Alternatives International and Volt Lithium Corp, you can compare the effects of market volatilities on Natural Alternatives and Volt 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 Natural Alternatives with a short position of Volt Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Alternatives and Volt Lithium.

Diversification Opportunities for Natural Alternatives and Volt Lithium

0.23

Correlation Coefficient

Natural Alternatives  Volt Lithium

Modest diversification

The 3 months correlation between Natural and Volt is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati and Volt Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volt Lithium Corp and Natural Alternatives 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 Natural Alternatives International are associated (or correlated) with Volt Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volt Lithium Corp has no effect on the direction of Natural Alternatives i.e., Natural Alternatives and Volt Lithium go up and down completely randomly.

Pair Corralation between Natural Alternatives and Volt Lithium

Given the investment horizon of 90 days Natural Alternatives International is expected to under-perform the Volt Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Natural Alternatives International is 1.44 times less risky than Volt Lithium. The stock trades about -0.13 of its potential returns per unit of risk. The Volt Lithium Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Volt Lithium Corp on September 5, 2024 and sell it today you would lose (7.00) from holding Volt Lithium Corp or give up 25.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Natural Alternatives Internati  vs.  Volt Lithium Corp

Natural Alternatives

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Alternatives International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Volt Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volt Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Natural Alternatives and Volt Lithium

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

The idea behind Natural Alternatives International and Volt Lithium 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.