Correlation Between Electra Battery and Kutcho Copper
Can any of the company-specific risk be diversified away by investing in both Electra Battery and Kutcho Copper 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 Kutcho Copper 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 Kutcho Copper Corp, you can compare the effects of market volatilities on Electra Battery and Kutcho Copper 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 Kutcho Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Kutcho Copper.
Diversification Opportunities for Electra Battery and Kutcho Copper
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Electra and Kutcho is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Kutcho Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kutcho Copper Corp 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 Kutcho Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kutcho Copper Corp has no effect on the direction of Electra Battery i.e., Electra Battery and Kutcho Copper go up and down completely randomly.
Pair Corralation between Electra Battery and Kutcho Copper
Assuming the 90 days trading horizon Electra Battery Materials is expected to generate 21.13 times more return on investment than Kutcho Copper. However, Electra Battery is 21.13 times more volatile than Kutcho Copper Corp. It trades about 0.24 of its potential returns per unit of risk. Kutcho Copper Corp is currently generating about 0.09 per unit of risk. If you would invest 62.00 in Electra Battery Materials on October 8, 2024 and sell it today you would earn a total of 199.00 from holding Electra Battery Materials or generate 320.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Electra Battery Materials vs. Kutcho Copper Corp
Performance |
Timeline |
Electra Battery Materials |
Kutcho Copper Corp |
Electra Battery and Kutcho Copper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Electra Battery and Kutcho Copper
The main advantage of trading using opposite Electra Battery and Kutcho Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery position performs unexpectedly, Kutcho Copper 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 Kutcho Copper will offset losses from the drop in Kutcho Copper's long position.Electra Battery vs. Frontier Lithium | Electra Battery vs. Electra Battery Materials | Electra Battery vs. E3 Lithium | Electra Battery vs. Canada Nickel |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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