Correlation Between Electra Battery and INTEL CDR

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

Diversification Opportunities for Electra Battery and INTEL CDR

0.42

Correlation Coefficient

Electra Battery  INTEL CDR

Very weak diversification

The 3 months correlation between Electra and INTEL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and INTEL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL 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 INTEL CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL CDR has no effect on the direction of Electra Battery i.e., Electra Battery and INTEL CDR go up and down completely randomly.

Pair Corralation between Electra Battery and INTEL CDR

Assuming the 90 days trading horizon Electra Battery Materials is expected to under-perform the INTEL CDR. In addition to that, Electra Battery is 1.99 times more volatile than INTEL CDR. It trades about -0.04 of its total potential returns per unit of risk. INTEL CDR is currently generating about -0.05 per unit of volatility. If you would invest  1,316  in INTEL CDR on October 5, 2024 and sell it today you would lose (129.00) from holding INTEL CDR or give up 9.8% of portfolio value over 90 days.

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

Electra Battery Materials  vs.  INTEL CDR

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 latest unfluctuating performance, the Stock's fundamental drivers remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

INTEL CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTEL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Electra Battery and INTEL CDR

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

The idea behind Electra Battery Materials and INTEL 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.