Correlation Between Electra Battery and Vale SA
Can any of the company-specific risk be diversified away by investing in both Electra Battery and Vale SA 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 Vale SA 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 Vale SA ADR, you can compare the effects of market volatilities on Electra Battery and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Vale SA.
Diversification Opportunities for Electra Battery and Vale SA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Electra and Vale is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Vale SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA ADR 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA ADR has no effect on the direction of Electra Battery i.e., Electra Battery and Vale SA go up and down completely randomly.
Pair Corralation between Electra Battery and Vale SA
Given the investment horizon of 90 days Electra Battery Materials is expected to generate 3.11 times more return on investment than Vale SA. However, Electra Battery is 3.11 times more volatile than Vale SA ADR. It trades about 0.0 of its potential returns per unit of risk. Vale SA ADR is currently generating about -0.05 per unit of risk. If you would invest 211.00 in Electra Battery Materials on December 2, 2024 and sell it today you would lose (50.00) from holding Electra Battery Materials or give up 23.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Electra Battery Materials vs. Vale SA ADR
Performance |
Timeline |
Electra Battery Materials |
Vale SA ADR |
Electra Battery and Vale SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Electra Battery and Vale SA
The main advantage of trading using opposite Electra Battery and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.Electra Battery vs. Cobalt Blue Holdings | Electra Battery vs. Bradda Head Lithium | Electra Battery vs. ioneer | Electra Battery vs. Tearlach Resources Limited |
Vale SA vs. BHP Group Limited | Vale SA vs. Teck Resources Ltd | Vale SA vs. Lithium Americas Corp | Vale SA vs. MP Materials Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |