Correlation Between Electra Battery and Solitario Exploration
Can any of the company-specific risk be diversified away by investing in both Electra Battery and Solitario Exploration 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 Solitario Exploration 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 Solitario Exploration Royalty, you can compare the effects of market volatilities on Electra Battery and Solitario Exploration 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 Solitario Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Solitario Exploration.
Diversification Opportunities for Electra Battery and Solitario Exploration
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electra and Solitario is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Solitario Exploration Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solitario Exploration 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 Solitario Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solitario Exploration has no effect on the direction of Electra Battery i.e., Electra Battery and Solitario Exploration go up and down completely randomly.
Pair Corralation between Electra Battery and Solitario Exploration
Given the investment horizon of 90 days Electra Battery Materials is expected to under-perform the Solitario Exploration. In addition to that, Electra Battery is 1.36 times more volatile than Solitario Exploration Royalty. It trades about -0.1 of its total potential returns per unit of risk. Solitario Exploration Royalty is currently generating about -0.12 per unit of volatility. If you would invest 70.00 in Solitario Exploration Royalty on August 29, 2024 and sell it today you would lose (9.00) from holding Solitario Exploration Royalty or give up 12.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Battery Materials vs. Solitario Exploration Royalty
Performance |
| Timeline |
| Electra Battery Materials |
| Solitario Exploration |
Electra Battery and Solitario Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Battery and Solitario Exploration
The main advantage of trading using opposite Electra Battery and Solitario Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery position performs unexpectedly, Solitario Exploration 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 Solitario Exploration will offset losses from the drop in Solitario Exploration's long position.| Electra Battery vs. Cobalt Blue Holdings | Electra Battery vs. Bradda Head Lithium | Electra Battery vs. ioneer | Electra Battery vs. Tearlach Resources Limited |
| Solitario Exploration vs. United States Antimony | Solitario Exploration vs. Golden Minerals | Solitario Exploration vs. International Tower Hill | Solitario Exploration vs. Vista Gold |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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