Correlation Between Gunpoint Exploration and Electra Battery

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

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

Diversification Opportunities for Gunpoint Exploration and Electra Battery

0.56

Correlation Coefficient

Gunpoint Exploration  Electra Battery

Very weak diversification

The 3 months correlation between Gunpoint and Electra is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gunpoint Exploration 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 Gunpoint Exploration 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 Gunpoint Exploration 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 Gunpoint Exploration i.e., Gunpoint Exploration and Electra Battery go up and down completely randomly.

Pair Corralation between Gunpoint Exploration and Electra Battery

Assuming the 90 days horizon Gunpoint Exploration is expected to generate 0.94 times more return on investment than Electra Battery. However, Gunpoint Exploration is 1.06 times less risky than Electra Battery. It trades about -0.05 of its potential returns per unit of risk. Electra Battery Materials is currently generating about -0.16 per unit of risk. If you would invest  70.00  in Gunpoint Exploration on September 13, 2024 and sell it today you would lose (8.00) from holding Gunpoint Exploration or give up 11.43% of portfolio value over 90 days.

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

Gunpoint Exploration  vs.  Electra Battery Materials

Gunpoint Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunpoint Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated 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 unfluctuating 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.

Pair Trading with Gunpoint Exploration and Electra Battery

The main advantage of trading using opposite Gunpoint Exploration and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunpoint Exploration 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 Gunpoint Exploration 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.