Correlation Between Rogers Communications and Electra Battery

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

By analyzing existing cross correlation between Rogers Communications and Electra Battery Materials, you can compare the effects of market volatilities on Rogers Communications and Electra 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 Rogers Communications with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rogers Communications and Electra Battery.

Diversification Opportunities for Rogers Communications and Electra Battery

0.88

Correlation Coefficient

Rogers Communications  Electra Battery

Very poor diversification

The 3 months correlation between Rogers and Electra is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery Materials and Rogers Communications 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 Rogers Communications are associated (or correlated) with Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of Rogers Communications i.e., Rogers Communications and Electra Battery go up and down completely randomly.

Pair Corralation between Rogers Communications and Electra Battery

Assuming the 90 days trading horizon Rogers Communications is expected to under-perform the Electra Battery. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 5.78 times less risky than Electra Battery. The stock trades about -0.5 of its potential returns per unit of risk. The Electra Battery Materials is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Electra Battery Materials on September 30, 2024 and sell it today you would lose (1.00) from holding Electra Battery Materials or give up 1.47% of portfolio value over 90 days.

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

Rogers Communications  vs.  Electra Battery Materials

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest abnormal performance, the Stock's fundamental drivers remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Rogers Communications and Electra Battery

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

The idea behind Rogers Communications and Electra Battery Materials 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.