Correlation Between Edison Cobalt and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Edison Cobalt and Leading Edge 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 Edison Cobalt and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison Cobalt Corp and Leading Edge Materials, you can compare the effects of market volatilities on Edison Cobalt and Leading Edge 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 Edison Cobalt with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison Cobalt and Leading Edge.
Diversification Opportunities for Edison Cobalt and Leading Edge
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Edison and Leading is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Edison Cobalt Corp and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and Edison Cobalt 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 Edison Cobalt Corp are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Edison Cobalt i.e., Edison Cobalt and Leading Edge go up and down completely randomly.
Pair Corralation between Edison Cobalt and Leading Edge
Assuming the 90 days horizon Edison Cobalt Corp is expected to under-perform the Leading Edge. In addition to that, Edison Cobalt is 1.24 times more volatile than Leading Edge Materials. It trades about -0.11 of its total potential returns per unit of risk. Leading Edge Materials is currently generating about -0.04 per unit of volatility. If you would invest 7.10 in Leading Edge Materials on August 29, 2024 and sell it today you would lose (0.50) from holding Leading Edge Materials or give up 7.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edison Cobalt Corp vs. Leading Edge Materials
Performance |
| Timeline |
| Edison Cobalt Corp |
| Leading Edge Materials |
Edison Cobalt and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edison Cobalt and Leading Edge
The main advantage of trading using opposite Edison Cobalt and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison Cobalt position performs unexpectedly, Leading Edge 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 Leading Edge will offset losses from the drop in Leading Edge's long position.| Edison Cobalt vs. Rockridge Resources | Edison Cobalt vs. Ameriwest Lithium | Edison Cobalt vs. Osisko Metals Incorporated | Edison Cobalt vs. Volt Lithium Corp |
| Leading Edge vs. Grid Metals Corp | Leading Edge vs. Fireweed Zinc | Leading Edge vs. First American Silver | Leading Edge vs. Australian Strategic Materials |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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