Correlation Between Leading Edge and Rogers Communications
Can any of the company-specific risk be diversified away by investing in both Leading Edge and Rogers Communications 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 Leading Edge and Rogers Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Edge Materials and Rogers Communications, you can compare the effects of market volatilities on Leading Edge and Rogers Communications 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 Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Rogers Communications.
Diversification Opportunities for Leading Edge and Rogers Communications
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leading and Rogers is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Leading Edge i.e., Leading Edge and Rogers Communications go up and down completely randomly.
Pair Corralation between Leading Edge and Rogers Communications
Assuming the 90 days horizon Leading Edge Materials is expected to under-perform the Rogers Communications. In addition to that, Leading Edge is 1.98 times more volatile than Rogers Communications. It trades about -0.03 of its total potential returns per unit of risk. Rogers Communications is currently generating about -0.06 per unit of volatility. If you would invest 4,775 in Rogers Communications on November 3, 2024 and sell it today you would lose (175.00) from holding Rogers Communications or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leading Edge Materials vs. Rogers Communications
Performance |
| Timeline |
| Leading Edge Materials |
| Rogers Communications |
Leading Edge and Rogers Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Rogers Communications
The main advantage of trading using opposite Leading Edge and Rogers Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Rogers Communications 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 Rogers Communications will offset losses from the drop in Rogers Communications' long position.| Leading Edge vs. Hannan Metals | Leading Edge vs. Mkango Resources | Leading Edge vs. Elcora Advanced Materials | Leading Edge vs. Midnight Sun Mining |
| Rogers Communications vs. Magna Mining | Rogers Communications vs. Dream Industrial Real | Rogers Communications vs. Black Mammoth Metals | Rogers Communications vs. CI Financial Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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