Correlation Between Electra Battery and Nova Minerals
Can any of the company-specific risk be diversified away by investing in both Electra Battery and Nova Minerals 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 Nova Minerals 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 Nova Minerals Limited, you can compare the effects of market volatilities on Electra Battery and Nova Minerals 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 Nova Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Nova Minerals.
Diversification Opportunities for Electra Battery and Nova Minerals
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electra and Nova is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of Electra Battery i.e., Electra Battery and Nova Minerals go up and down completely randomly.
Pair Corralation between Electra Battery and Nova Minerals
Given the investment horizon of 90 days Electra Battery is expected to generate 5.17 times less return on investment than Nova Minerals. But when comparing it to its historical volatility, Electra Battery Materials is 1.08 times less risky than Nova Minerals. It trades about 0.03 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 480.00 in Nova Minerals Limited on August 26, 2024 and sell it today you would earn a total of 336.00 from holding Nova Minerals Limited or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 35.34% |
| Values | Daily Returns |
Electra Battery Materials vs. Nova Minerals Limited
Performance |
| Timeline |
| Electra Battery Materials |
| Nova Minerals Limited |
Electra Battery and Nova Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Battery and Nova Minerals
The main advantage of trading using opposite Electra Battery and Nova Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery position performs unexpectedly, Nova Minerals 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 Nova Minerals will offset losses from the drop in Nova Minerals' long position.| Electra Battery vs. Vale SA ADR | Electra Battery vs. Teck Resources Ltd | Electra Battery vs. MP Materials Corp | Electra Battery vs. BHP Group Limited |
| Nova Minerals vs. MP Materials Corp | Nova Minerals vs. NioCorp Developments Ltd | Nova Minerals vs. Vale SA ADR | Nova Minerals vs. Vizsla Resources Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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