Correlation Between Graphite One and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Graphite One 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 Graphite One and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphite One and Leading Edge Materials, you can compare the effects of market volatilities on Graphite One 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 Graphite One with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphite One and Leading Edge.
Diversification Opportunities for Graphite One and Leading Edge
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Graphite and Leading is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Graphite One 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 Graphite One 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 Graphite One 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 Graphite One i.e., Graphite One and Leading Edge go up and down completely randomly.
Pair Corralation between Graphite One and Leading Edge
Assuming the 90 days horizon Graphite One is expected to generate 0.7 times more return on investment than Leading Edge. However, Graphite One is 1.42 times less risky than Leading Edge. It trades about 0.02 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.03 per unit of risk. If you would invest 84.00 in Graphite One on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Graphite One or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graphite One vs. Leading Edge Materials
Performance |
| Timeline |
| Graphite One |
| Leading Edge Materials |
Graphite One and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphite One and Leading Edge
The main advantage of trading using opposite Graphite One and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphite One 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.| Graphite One vs. Northern Graphite | Graphite One vs. Mason Graphite | Graphite One vs. Focus Graphite | Graphite One vs. Canada Carbon |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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