Correlation Between Electra Battery and Canada Nickel

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

Diversification Opportunities for Electra Battery and Canada Nickel

0.37

Correlation Coefficient

Electra Battery  Canada Nickel

Weak diversification

The 3 months correlation between Electra and Canada is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Canada Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Nickel 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 Canada Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Nickel has no effect on the direction of Electra Battery i.e., Electra Battery and Canada Nickel go up and down completely randomly.

Pair Corralation between Electra Battery and Canada Nickel

Given the investment horizon of 90 days Electra Battery Materials is expected to generate 1.41 times more return on investment than Canada Nickel. However, Electra Battery is 1.41 times more volatile than Canada Nickel. It trades about 0.11 of its potential returns per unit of risk. Canada Nickel is currently generating about 0.07 per unit of risk. If you would invest  146.00  in Electra Battery Materials on December 2, 2024 and sell it today you would earn a total of  15.00  from holding Electra Battery Materials or generate 10.27% 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.  Canada Nickel

Electra Battery Materials

Risk-Adjusted Performance

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 fragile performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Canada Nickel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canada Nickel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Canada Nickel is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Electra Battery and Canada Nickel

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

The idea behind Electra Battery Materials and Canada Nickel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.