Correlation Between Ioneer and Electra Battery
Can any of the company-specific risk be diversified away by investing in both Ioneer 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 Ioneer and Electra Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ioneer and Electra Battery Materials, you can compare the effects of market volatilities on Ioneer 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 Ioneer with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ioneer and Electra Battery.
Diversification Opportunities for Ioneer and Electra Battery
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ioneer and Electra is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ioneer 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 Ioneer 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 ioneer 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 Ioneer i.e., Ioneer and Electra Battery go up and down completely randomly.
Pair Corralation between Ioneer and Electra Battery
Assuming the 90 days horizon ioneer is expected to generate 1.79 times more return on investment than Electra Battery. However, Ioneer is 1.79 times more volatile than Electra Battery Materials. It trades about 0.06 of its potential returns per unit of risk. Electra Battery Materials is currently generating about 0.05 per unit of risk. If you would invest 11.00 in ioneer on August 25, 2024 and sell it today you would earn a total of 3.00 from holding ioneer or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ioneer vs. Electra Battery Materials
Performance |
| Timeline |
| ioneer |
| Electra Battery Materials |
Ioneer and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ioneer and Electra Battery
The main advantage of trading using opposite Ioneer and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ioneer 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.| Ioneer vs. Norra Metals Corp | Ioneer vs. ZincX Resources Corp | Ioneer vs. Nuinsco Resources Limited | Ioneer vs. South Star Battery |
| Electra Battery vs. Cobalt Blue Holdings | Electra Battery vs. Bradda Head Lithium | Electra Battery vs. ioneer | Electra Battery vs. Tearlach Resources Limited |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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