Correlation Between Electra Battery and GOLDMAN SACHS

Can any of the company-specific risk be diversified away by investing in both Electra Battery and GOLDMAN SACHS 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 GOLDMAN SACHS 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 GOLDMAN SACHS CDR, you can compare the effects of market volatilities on Electra Battery and GOLDMAN SACHS 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 GOLDMAN SACHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and GOLDMAN SACHS.

Diversification Opportunities for Electra Battery and GOLDMAN SACHS

0.35

Correlation Coefficient

Electra Battery  GOLDMAN SACHS

Weak diversification

The 3 months correlation between Electra and GOLDMAN is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and GOLDMAN SACHS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDMAN SACHS CDR 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 GOLDMAN SACHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDMAN SACHS CDR has no effect on the direction of Electra Battery i.e., Electra Battery and GOLDMAN SACHS go up and down completely randomly.

Pair Corralation between Electra Battery and GOLDMAN SACHS

Assuming the 90 days trading horizon Electra Battery Materials is expected to generate 21.32 times more return on investment than GOLDMAN SACHS. However, Electra Battery is 21.32 times more volatile than GOLDMAN SACHS CDR. It trades about 0.1 of its potential returns per unit of risk. GOLDMAN SACHS CDR is currently generating about -0.03 per unit of risk. If you would invest  79.00  in Electra Battery Materials on December 30, 2024 and sell it today you would earn a total of  76.00  from holding Electra Battery Materials or generate 96.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Electra Battery Materials  vs.  GOLDMAN SACHS CDR

Electra Battery Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electra Battery Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Electra Battery showed solid returns over the last few months and may actually be approaching a breakup point.

GOLDMAN SACHS CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days GOLDMAN SACHS CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GOLDMAN SACHS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Electra Battery and GOLDMAN SACHS

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

The idea behind Electra Battery Materials and GOLDMAN SACHS CDR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.