Correlation Between Electra Battery and Westshore Terminals

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

Diversification Opportunities for Electra Battery and Westshore Terminals

0.64

Correlation Coefficient

Electra Battery  Westshore Terminals

Poor diversification

The 3 months correlation between Electra and Westshore is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals 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 Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of Electra Battery i.e., Electra Battery and Westshore Terminals go up and down completely randomly.

Pair Corralation between Electra Battery and Westshore Terminals

Assuming the 90 days trading horizon Electra Battery Materials is expected to under-perform the Westshore Terminals. In addition to that, Electra Battery is 2.74 times more volatile than Westshore Terminals Investment. It trades about -0.17 of its total potential returns per unit of risk. Westshore Terminals Investment is currently generating about -0.09 per unit of volatility. If you would invest  2,470  in Westshore Terminals Investment on September 26, 2024 and sell it today you would lose (163.00) from holding Westshore Terminals Investment or give up 6.6% of portfolio value over 90 days.

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

Electra Battery Materials  vs.  Westshore Terminals Investment

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 abnormal performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Westshore Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westshore Terminals Investment 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Electra Battery and Westshore Terminals

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

The idea behind Electra Battery Materials and Westshore Terminals Investment 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.