Correlation Between Electra Battery and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Electra Battery and Fairfax Financial 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 Fairfax Financial 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 Fairfax Financial Holdings, you can compare the effects of market volatilities on Electra Battery and Fairfax Financial 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 Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Fairfax Financial.
Diversification Opportunities for Electra Battery and Fairfax Financial
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Electra and Fairfax is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial 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 Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Electra Battery i.e., Electra Battery and Fairfax Financial go up and down completely randomly.
Pair Corralation between Electra Battery and Fairfax Financial
Assuming the 90 days trading horizon Electra Battery Materials is expected to under-perform the Fairfax Financial. In addition to that, Electra Battery is 2.91 times more volatile than Fairfax Financial Holdings. It trades about -0.31 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.18 per unit of volatility. If you would invest 2,155 in Fairfax Financial Holdings on September 20, 2024 and sell it today you would earn a total of 85.00 from holding Fairfax Financial Holdings or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Battery Materials vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Electra Battery Materials |
| Fairfax Financial |
Electra Battery and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Battery and Fairfax Financial
The main advantage of trading using opposite Electra Battery and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery position performs unexpectedly, Fairfax Financial 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 Fairfax Financial will offset losses from the drop in Fairfax Financial's long position.| Electra Battery vs. Foraco International SA | Electra Battery vs. Geodrill Limited | Electra Battery vs. Bri Chem Corp |
| Fairfax Financial vs. Nicola Mining | Fairfax Financial vs. Osisko Metals | Fairfax Financial vs. Aya Gold Silver | Fairfax Financial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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