Correlation Between Leading Edge and Enbridge
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By analyzing existing cross correlation between Leading Edge Materials and Enbridge Pref 5, you can compare the effects of market volatilities on Leading Edge and Enbridge 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 Leading Edge with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Enbridge.
Diversification Opportunities for Leading Edge and Enbridge
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leading and Enbridge is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Enbridge Pref 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 5 and Leading Edge 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 Leading Edge Materials are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref 5 has no effect on the direction of Leading Edge i.e., Leading Edge and Enbridge go up and down completely randomly.
Pair Corralation between Leading Edge and Enbridge
Assuming the 90 days horizon Leading Edge Materials is expected to generate 26.1 times more return on investment than Enbridge. However, Leading Edge is 26.1 times more volatile than Enbridge Pref 5. It trades about 0.37 of its potential returns per unit of risk. Enbridge Pref 5 is currently generating about 0.18 per unit of risk. If you would invest 8.50 in Leading Edge Materials on December 8, 2024 and sell it today you would earn a total of 17.50 from holding Leading Edge Materials or generate 205.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Leading Edge Materials vs. Enbridge Pref 5
Performance |
| Timeline |
| Leading Edge Materials |
| Enbridge Pref 5 |
Leading Edge and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Enbridge
The main advantage of trading using opposite Leading Edge and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Leading Edge vs. Hannan Metals | ||
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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