Correlation Between Dave Busters and E3 LITHIUM

Can any of the company-specific risk be diversified away by investing in both Dave Busters and E3 LITHIUM 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 Dave Busters and E3 LITHIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dave Busters Entertainment and E3 LITHIUM LTD, you can compare the effects of market volatilities on Dave Busters and E3 LITHIUM 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 Dave Busters with a short position of E3 LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and E3 LITHIUM.

Diversification Opportunities for Dave Busters and E3 LITHIUM

-0.35

Correlation Coefficient

Dave Busters  E3 LITHIUM

Very good diversification

The 3 months correlation between Dave and OW3 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and E3 LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 LITHIUM LTD and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with E3 LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 LITHIUM LTD has no effect on the direction of Dave Busters i.e., Dave Busters and E3 LITHIUM go up and down completely randomly.

Pair Corralation between Dave Busters and E3 LITHIUM

Assuming the 90 days horizon Dave Busters Entertainment is expected to under-perform the E3 LITHIUM. But the stock apears to be less risky and, when comparing its historical volatility, Dave Busters Entertainment is 1.19 times less risky than E3 LITHIUM. The stock trades about -0.3 of its potential returns per unit of risk. The E3 LITHIUM LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  62.00  in E3 LITHIUM LTD on September 18, 2024 and sell it today you would earn a total of  2.00  from holding E3 LITHIUM LTD or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dave Busters Entertainment  vs.  E3 LITHIUM LTD

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

E3 LITHIUM LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E3 LITHIUM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Dave Busters and E3 LITHIUM

The main advantage of trading using opposite Dave Busters and E3 LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters position performs unexpectedly, E3 LITHIUM 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 E3 LITHIUM will offset losses from the drop in E3 LITHIUM's long position.

The idea behind Dave Busters Entertainment and E3 LITHIUM LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..