Correlation Between Electra Battery and Falcon Energy
Can any of the company-specific risk be diversified away by investing in both Electra Battery and Falcon Energy 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 Falcon Energy 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 Falcon Energy Materials, you can compare the effects of market volatilities on Electra Battery and Falcon Energy 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 Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Falcon Energy.
Diversification Opportunities for Electra Battery and Falcon Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electra and Falcon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials 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 Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of Electra Battery i.e., Electra Battery and Falcon Energy go up and down completely randomly.
Pair Corralation between Electra Battery and Falcon Energy
Assuming the 90 days trading horizon Electra Battery Materials is expected to under-perform the Falcon Energy. But the stock apears to be less risky and, when comparing its historical volatility, Electra Battery Materials is 1.67 times less risky than Falcon Energy. The stock trades about -0.1 of its potential returns per unit of risk. The Falcon Energy Materials is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 69.00 in Falcon Energy Materials on August 29, 2024 and sell it today you would earn a total of 17.00 from holding Falcon Energy Materials or generate 24.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Battery Materials vs. Falcon Energy Materials
Performance |
| Timeline |
| Electra Battery Materials |
| Falcon Energy Materials |
Electra Battery and Falcon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Battery and Falcon Energy
The main advantage of trading using opposite Electra Battery and Falcon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery position performs unexpectedly, Falcon Energy 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 Falcon Energy will offset losses from the drop in Falcon Energy's long position.| Electra Battery vs. Frontier Lithium | Electra Battery vs. Electra Battery Materials | Electra Battery vs. E3 Lithium | Electra Battery vs. Canada Nickel |
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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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