Correlation Between Canada Nickel and Electra Battery
Can any of the company-specific risk be diversified away by investing in both Canada Nickel and Electra Battery 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 Canada Nickel and Electra Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canada Nickel and Electra Battery Materials, you can compare the effects of market volatilities on Canada Nickel and Electra Battery 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 Canada Nickel with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Nickel and Electra Battery.
Diversification Opportunities for Canada Nickel and Electra Battery
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canada and Electra is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Canada Nickel and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery Materials and Canada Nickel 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 Canada Nickel are associated (or correlated) with Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of Canada Nickel i.e., Canada Nickel and Electra Battery go up and down completely randomly.
Pair Corralation between Canada Nickel and Electra Battery
Assuming the 90 days horizon Canada Nickel is expected to generate 0.85 times more return on investment than Electra Battery. However, Canada Nickel is 1.18 times less risky than Electra Battery. It trades about -0.1 of its potential returns per unit of risk. Electra Battery Materials is currently generating about -0.11 per unit of risk. If you would invest 104.00 in Canada Nickel on August 28, 2024 and sell it today you would lose (6.00) from holding Canada Nickel or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canada Nickel vs. Electra Battery Materials
Performance |
| Timeline |
| Canada Nickel |
| Electra Battery Materials |
Canada Nickel and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canada Nickel and Electra Battery
The main advantage of trading using opposite Canada Nickel and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Nickel position performs unexpectedly, Electra Battery 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 Electra Battery will offset losses from the drop in Electra Battery's long position.| Canada Nickel vs. First Majestic Silver | Canada Nickel vs. Ivanhoe Energy | Canada Nickel vs. Orezone Gold Corp | Canada Nickel vs. Faraday Copper Corp |
| Electra Battery vs. Vale SA ADR | Electra Battery vs. Teck Resources Ltd | Electra Battery vs. BHP Group Limited | Electra Battery vs. Glencore PLC ADR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |