Correlation Between First American and Australian Vanadium

Can any of the company-specific risk be diversified away by investing in both First American and Australian Vanadium 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 First American and Australian Vanadium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First American Silver and Australian Vanadium Limited, you can compare the effects of market volatilities on First American and Australian Vanadium 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 First American with a short position of Australian Vanadium. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Australian Vanadium.

Diversification Opportunities for First American and Australian Vanadium

0.12

Correlation Coefficient

First American  Australian Vanadium

Average diversification

The 3 months correlation between First and Australian is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding First American Silver and Australian Vanadium Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Vanadium and First American 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 First American Silver are associated (or correlated) with Australian Vanadium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Vanadium has no effect on the direction of First American i.e., First American and Australian Vanadium go up and down completely randomly.

Pair Corralation between First American and Australian Vanadium

Given the investment horizon of 90 days First American Silver is expected to generate 3.68 times more return on investment than Australian Vanadium. However, First American is 3.68 times more volatile than Australian Vanadium Limited. It trades about 0.11 of its potential returns per unit of risk. Australian Vanadium Limited is currently generating about 0.1 per unit of risk. If you would invest  0.01  in First American Silver on May 18, 2025 and sell it today you would earn a total of  0.00  from holding First American Silver or generate 0.0% return on investment over 90 days.

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

First American Silver  vs.  Australian Vanadium Limited

First American Silver

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First American Silver are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, First American sustained solid returns over the last few months and may actually be approaching a breakup point.

Australian Vanadium

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Vanadium Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Australian Vanadium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First American and Australian Vanadium

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

The idea behind First American Silver and Australian Vanadium Limited 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.