Correlation Between Elcora Advanced and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Elcora Advanced 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 Elcora Advanced and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elcora Advanced Materials and Leading Edge Materials, you can compare the effects of market volatilities on Elcora Advanced 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 Elcora Advanced with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcora Advanced and Leading Edge.
Diversification Opportunities for Elcora Advanced and Leading Edge
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elcora and Leading is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Elcora Advanced Materials 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 Elcora Advanced 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 Elcora Advanced Materials 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 Elcora Advanced i.e., Elcora Advanced and Leading Edge go up and down completely randomly.
Pair Corralation between Elcora Advanced and Leading Edge
Assuming the 90 days horizon Elcora Advanced Materials is expected to generate 3.31 times more return on investment than Leading Edge. However, Elcora Advanced is 3.31 times more volatile than Leading Edge Materials. It trades about 0.03 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.08 per unit of risk. If you would invest 2.00 in Elcora Advanced Materials on October 19, 2024 and sell it today you would lose (0.25) from holding Elcora Advanced Materials or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elcora Advanced Materials vs. Leading Edge Materials
Performance |
| Timeline |
| Elcora Advanced Materials |
| Leading Edge Materials |
Elcora Advanced and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcora Advanced and Leading Edge
The main advantage of trading using opposite Elcora Advanced and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcora Advanced 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.| Elcora Advanced vs. Black Widow Resources | Elcora Advanced vs. Magnum Goldcorp | Elcora Advanced vs. Leading Edge Materials | Elcora Advanced vs. Eros Resources Corp |
| Leading Edge vs. Hannan Metals | Leading Edge vs. Mkango Resources | Leading Edge vs. Elcora Advanced Materials | Leading Edge vs. Midnight Sun Mining |
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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