Correlation Between Fremont Gold and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Fremont Gold 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 Fremont Gold and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fremont Gold and Leading Edge Materials, you can compare the effects of market volatilities on Fremont Gold 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 Fremont Gold with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fremont Gold and Leading Edge.
Diversification Opportunities for Fremont Gold and Leading Edge
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fremont and Leading is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold 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 Fremont Gold 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 Fremont Gold 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 Fremont Gold i.e., Fremont Gold and Leading Edge go up and down completely randomly.
Pair Corralation between Fremont Gold and Leading Edge
Assuming the 90 days horizon Fremont Gold is expected to under-perform the Leading Edge. In addition to that, Fremont Gold is 2.25 times more volatile than Leading Edge Materials. It trades about -0.1 of its total potential returns per unit of risk. Leading Edge Materials is currently generating about -0.08 per unit of volatility. If you would invest 9.50 in Leading Edge Materials on October 10, 2024 and sell it today you would lose (0.50) from holding Leading Edge Materials or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fremont Gold vs. Leading Edge Materials
Performance |
| Timeline |
| Fremont Gold |
| Leading Edge Materials |
Fremont Gold and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fremont Gold and Leading Edge
The main advantage of trading using opposite Fremont Gold and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fremont Gold 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.| Fremont Gold vs. Tesoro Minerals Corp | Fremont Gold vs. Palamina Corp | Fremont Gold vs. Empire Metals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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