Correlation Between E3 Lithium and Electra Battery
Can any of the company-specific risk be diversified away by investing in both E3 Lithium and Electra Battery 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 E3 Lithium and Electra Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E3 Lithium and Electra Battery Materials, you can compare the effects of market volatilities on E3 Lithium and Electra Battery 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 E3 Lithium with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of E3 Lithium and Electra Battery.
Diversification Opportunities for E3 Lithium and Electra Battery
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ETL and Electra is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding E3 Lithium and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery Materials and E3 Lithium 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 E3 Lithium are associated (or correlated) with Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of E3 Lithium i.e., E3 Lithium and Electra Battery go up and down completely randomly.
Pair Corralation between E3 Lithium and Electra Battery
Assuming the 90 days horizon E3 Lithium is expected to under-perform the Electra Battery. In addition to that, E3 Lithium is 1.0 times more volatile than Electra Battery Materials. It trades about -0.11 of its total potential returns per unit of risk. Electra Battery Materials is currently generating about -0.11 per unit of volatility. If you would invest 54.00 in Electra Battery Materials on August 28, 2024 and sell it today you would lose (4.00) from holding Electra Battery Materials or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E3 Lithium vs. Electra Battery Materials
Performance |
| Timeline |
| E3 Lithium |
| Electra Battery Materials |
E3 Lithium and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E3 Lithium and Electra Battery
The main advantage of trading using opposite E3 Lithium and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E3 Lithium position performs unexpectedly, Electra Battery 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 Electra Battery will offset losses from the drop in Electra Battery's long position.| E3 Lithium vs. Frontier Lithium | E3 Lithium vs. Sigma Lithium Resources | E3 Lithium vs. Standard Lithium | E3 Lithium vs. LithiumBank Resources Corp |
| Electra Battery vs. Vale SA ADR | Electra Battery vs. Teck Resources Ltd | Electra Battery vs. BHP Group Limited | Electra Battery vs. Glencore PLC ADR |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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