Correlation Between Electra Battery and Black Mammoth

Can any of the company-specific risk be diversified away by investing in both Electra Battery and Black Mammoth 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 Electra Battery and Black Mammoth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electra Battery Materials and Black Mammoth Metals, you can compare the effects of market volatilities on Electra Battery and Black Mammoth 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 Electra Battery with a short position of Black Mammoth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Black Mammoth.

Diversification Opportunities for Electra Battery and Black Mammoth

-0.3

Correlation Coefficient

Electra Battery  Black Mammoth

Very good diversification

The 3 months correlation between Electra and Black is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Black Mammoth Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Mammoth Metals and Electra Battery 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 Electra Battery Materials are associated (or correlated) with Black Mammoth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Mammoth Metals has no effect on the direction of Electra Battery i.e., Electra Battery and Black Mammoth go up and down completely randomly.

Pair Corralation between Electra Battery and Black Mammoth

Assuming the 90 days trading horizon Electra Battery Materials is expected to under-perform the Black Mammoth. In addition to that, Electra Battery is 1.03 times more volatile than Black Mammoth Metals. It trades about -0.04 of its total potential returns per unit of risk. Black Mammoth Metals is currently generating about 0.05 per unit of volatility. If you would invest  85.00  in Black Mammoth Metals on October 3, 2024 and sell it today you would earn a total of  10.00  from holding Black Mammoth Metals or generate 11.76% return on investment over 90 days.

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

Electra Battery Materials  vs.  Black Mammoth Metals

Electra Battery Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electra Battery Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Black Mammoth Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Black Mammoth Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Black Mammoth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electra Battery and Black Mammoth

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

The idea behind Electra Battery Materials and Black Mammoth Metals 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.