Correlation Between Teck Resources and Electra Battery
Can any of the company-specific risk be diversified away by investing in both Teck Resources 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 Teck Resources and Electra Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teck Resources Ltd and Electra Battery Materials, you can compare the effects of market volatilities on Teck Resources 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 Teck Resources with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teck Resources and Electra Battery.
Diversification Opportunities for Teck Resources and Electra Battery
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Teck and Electra is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Teck Resources Ltd 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 Teck Resources 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 Teck Resources Ltd 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 Teck Resources i.e., Teck Resources and Electra Battery go up and down completely randomly.
Pair Corralation between Teck Resources and Electra Battery
Given the investment horizon of 90 days Teck Resources Ltd is expected to generate 0.37 times more return on investment than Electra Battery. However, Teck Resources Ltd is 2.68 times less risky than Electra Battery. It trades about 0.03 of its potential returns per unit of risk. Electra Battery Materials is currently generating about -0.01 per unit of risk. If you would invest 3,540 in Teck Resources Ltd on August 30, 2024 and sell it today you would earn a total of 1,084 from holding Teck Resources Ltd or generate 30.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Teck Resources Ltd vs. Electra Battery Materials
Performance |
| Timeline |
| Teck Resources |
| Electra Battery Materials |
Teck Resources and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teck Resources and Electra Battery
The main advantage of trading using opposite Teck Resources and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teck Resources 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.| Teck Resources vs. Rio Tinto ADR | Teck Resources vs. Vale SA ADR | Teck Resources vs. MP Materials Corp | Teck Resources vs. Lithium Americas Corp |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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