Correlation Between Frontier Lithium and Electra Battery
Can any of the company-specific risk be diversified away by investing in both Frontier 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 Frontier 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 Frontier Lithium and Electra Battery Materials, you can compare the effects of market volatilities on Frontier 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 Frontier Lithium with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Lithium and Electra Battery.
Diversification Opportunities for Frontier Lithium and Electra Battery
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Frontier and Electra is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Frontier 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 Frontier 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 Frontier 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 Frontier Lithium i.e., Frontier Lithium and Electra Battery go up and down completely randomly.
Pair Corralation between Frontier Lithium and Electra Battery
Given the investment horizon of 90 days Frontier Lithium is expected to under-perform the Electra Battery. But the stock apears to be less risky and, when comparing its historical volatility, Frontier Lithium is 1.0 times less risky than Electra Battery. The stock trades about 0.0 of its potential returns per unit of risk. The Electra Battery Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Electra Battery Materials on August 24, 2024 and sell it today you would earn a total of 5.00 from holding Electra Battery Materials or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Frontier Lithium vs. Electra Battery Materials
Performance |
| Timeline |
| Frontier Lithium |
| Electra Battery Materials |
Frontier Lithium and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Lithium and Electra Battery
The main advantage of trading using opposite Frontier Lithium and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier 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.| Frontier Lithium vs. Critical Elements | Frontier Lithium vs. Rock Tech Lithium | Frontier Lithium vs. American Lithium Corp | Frontier Lithium vs. American Manganese |
| Electra Battery vs. Frontier Lithium | Electra Battery vs. Electra Battery Materials | Electra Battery vs. E3 Lithium | Electra Battery vs. Canada Nickel |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |