Correlation Between Critical Elements and International Battery
Can any of the company-specific risk be diversified away by investing in both Critical Elements and International 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 Critical Elements and International Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Critical Elements and International Battery Metals, you can compare the effects of market volatilities on Critical Elements and International 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 Critical Elements with a short position of International Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Critical Elements and International Battery.
Diversification Opportunities for Critical Elements and International Battery
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Critical and International is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Critical Elements and International Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Battery and Critical Elements 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 Critical Elements are associated (or correlated) with International Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Battery has no effect on the direction of Critical Elements i.e., Critical Elements and International Battery go up and down completely randomly.
Pair Corralation between Critical Elements and International Battery
Assuming the 90 days horizon Critical Elements is expected to generate 0.3 times more return on investment than International Battery. However, Critical Elements is 3.35 times less risky than International Battery. It trades about -0.42 of its potential returns per unit of risk. International Battery Metals is currently generating about -0.14 per unit of risk. If you would invest 41.00 in Critical Elements on September 1, 2024 and sell it today you would lose (12.00) from holding Critical Elements or give up 29.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Critical Elements vs. International Battery Metals
Performance |
| Timeline |
| Critical Elements |
| International Battery |
Critical Elements and International Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Critical Elements and International Battery
The main advantage of trading using opposite Critical Elements and International Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Critical Elements position performs unexpectedly, International 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 International Battery will offset losses from the drop in International Battery's long position.| Critical Elements vs. Argosy Minerals Limited | Critical Elements vs. Aurelia Metals Limited | Critical Elements vs. Artemis Resources | Critical Elements vs. Ascendant Resources |
| International Battery vs. Savannah Resources Plc | International Battery vs. Tartisan Nickel Corp | International Battery vs. Critical Elements | International Battery vs. Lithium Energi Exploration |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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