Correlation Between Canada Rare and International Battery

Can any of the company-specific risk be diversified away by investing in both Canada Rare and International Battery 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 Canada Rare and International Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canada Rare Earth and International Battery Metals, you can compare the effects of market volatilities on Canada Rare and International Battery 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 Canada Rare with a short position of International Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Rare and International Battery.

Diversification Opportunities for Canada Rare and International Battery

-0.45

Correlation Coefficient

Canada Rare  International Battery

Very good diversification

The 3 months correlation between Canada and International is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Canada Rare Earth and International Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Battery and Canada Rare 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 Canada Rare Earth are associated (or correlated) with International Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Battery has no effect on the direction of Canada Rare i.e., Canada Rare and International Battery go up and down completely randomly.

Pair Corralation between Canada Rare and International Battery

Assuming the 90 days horizon Canada Rare Earth is not expected to generate positive returns. Moreover, Canada Rare is 1.03 times more volatile than International Battery Metals. It trades away all of its potential returns to assume current level of volatility. International Battery Metals is currently generating about 0.23 per unit of risk. If you would invest  20.00  in International Battery Metals on October 11, 2024 and sell it today you would earn a total of  24.00  from holding International Battery Metals or generate 120.0% return on investment over 90 days.

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

Canada Rare Earth  vs.  International Battery Metals

Canada Rare Earth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canada Rare Earth are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Canada Rare reported solid returns over the last few months and may actually be approaching a breakup point.

International Battery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Battery Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canada Rare and International Battery

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

The idea behind Canada Rare Earth and International Battery Metals 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.