Correlation Between Elcora Advanced and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both Elcora Advanced and Northern Graphite 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 Elcora Advanced and Northern Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elcora Advanced Materials and Northern Graphite, you can compare the effects of market volatilities on Elcora Advanced and Northern Graphite 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 Elcora Advanced with a short position of Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcora Advanced and Northern Graphite.
Diversification Opportunities for Elcora Advanced and Northern Graphite
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elcora and Northern is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Elcora Advanced Materials and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite and Elcora Advanced 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 Elcora Advanced Materials are associated (or correlated) with Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of Elcora Advanced i.e., Elcora Advanced and Northern Graphite go up and down completely randomly.
Pair Corralation between Elcora Advanced and Northern Graphite
Assuming the 90 days horizon Elcora Advanced Materials is expected to under-perform the Northern Graphite. But the stock apears to be less risky and, when comparing its historical volatility, Elcora Advanced Materials is 1.18 times less risky than Northern Graphite. The stock trades about -0.22 of its potential returns per unit of risk. The Northern Graphite is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7.50 in Northern Graphite on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Northern Graphite or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Elcora Advanced Materials vs. Northern Graphite
Performance |
| Timeline |
| Elcora Advanced Materials |
| Northern Graphite |
Elcora Advanced and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcora Advanced and Northern Graphite
The main advantage of trading using opposite Elcora Advanced and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcora Advanced position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.| Elcora Advanced vs. Algoma Steel Group | Elcora Advanced vs. Champion Iron | Elcora Advanced vs. International Zeolite Corp | Elcora Advanced vs. European Residential Real |
| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Lomiko Metals | Northern Graphite vs. Graphite One |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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