Correlation Between Electra Battery and ExGen Resources
Can any of the company-specific risk be diversified away by investing in both Electra Battery and ExGen Resources 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 Electra Battery and ExGen Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra Battery Materials and ExGen Resources, you can compare the effects of market volatilities on Electra Battery and ExGen Resources 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 Electra Battery with a short position of ExGen Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and ExGen Resources.
Diversification Opportunities for Electra Battery and ExGen Resources
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Electra and ExGen is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and ExGen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExGen Resources and Electra Battery 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 Electra Battery Materials are associated (or correlated) with ExGen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExGen Resources has no effect on the direction of Electra Battery i.e., Electra Battery and ExGen Resources go up and down completely randomly.
Pair Corralation between Electra Battery and ExGen Resources
Assuming the 90 days trading horizon Electra Battery Materials is expected to under-perform the ExGen Resources. But the stock apears to be less risky and, when comparing its historical volatility, Electra Battery Materials is 3.44 times less risky than ExGen Resources. The stock trades about -0.37 of its potential returns per unit of risk. The ExGen Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8.00 in ExGen Resources on September 12, 2024 and sell it today you would earn a total of 0.00 from holding ExGen Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Battery Materials vs. ExGen Resources
Performance |
| Timeline |
| Electra Battery Materials |
| ExGen Resources |
Electra Battery and ExGen Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Battery and ExGen Resources
The main advantage of trading using opposite Electra Battery and ExGen Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery position performs unexpectedly, ExGen Resources 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 ExGen Resources will offset losses from the drop in ExGen Resources' long position.| Electra Battery vs. Ressources Minieres Radisson | Electra Battery vs. Galantas Gold Corp | Electra Battery vs. Red Pine Exploration | Electra Battery vs. Kore Mining |
| ExGen Resources vs. Arbor Metals Corp | ExGen Resources vs. Ramp Metals | ExGen Resources vs. High Liner Foods | ExGen Resources vs. Electra Battery Materials |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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