Correlation Between Royal Bank and Electra Battery
Can any of the company-specific risk be diversified away by investing in both Royal Bank 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 Royal Bank and Electra Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Electra Battery Materials, you can compare the effects of market volatilities on Royal Bank 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 Royal Bank with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Electra Battery.
Diversification Opportunities for Royal Bank and Electra Battery
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royal and Electra is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of 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 Royal Bank 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 Royal Bank of 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 Royal Bank i.e., Royal Bank and Electra Battery go up and down completely randomly.
Pair Corralation between Royal Bank and Electra Battery
Assuming the 90 days trading horizon Royal Bank is expected to generate 1.53 times less return on investment than Electra Battery. But when comparing it to its historical volatility, Royal Bank of is 6.34 times less risky than Electra Battery. It trades about 0.13 of its potential returns per unit of risk. 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 26, 2024 and sell it today you would earn a total of 6.00 from holding Electra Battery Materials or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Electra Battery Materials
Performance |
| Timeline |
| Royal Bank |
| Electra Battery Materials |
Royal Bank and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Electra Battery
The main advantage of trading using opposite Royal Bank and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank 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.| Royal Bank vs. Forstrong Global Income | Royal Bank vs. BMO Aggregate Bond | Royal Bank vs. Terreno Resources Corp | Royal Bank vs. iShares Canadian HYBrid |
| Electra Battery vs. First Majestic Silver | Electra Battery vs. Ivanhoe Energy | Electra Battery vs. Orezone Gold Corp | Electra Battery vs. Faraday Copper Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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