Correlation Between Leading Edge and Champion Bear
Can any of the company-specific risk be diversified away by investing in both Leading Edge and Champion Bear 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 Champion Bear 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 Champion Bear Resources, you can compare the effects of market volatilities on Leading Edge and Champion Bear 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 Champion Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Champion Bear.
Diversification Opportunities for Leading Edge and Champion Bear
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leading and Champion is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Champion Bear Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Bear Resources 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 Champion Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Bear Resources has no effect on the direction of Leading Edge i.e., Leading Edge and Champion Bear go up and down completely randomly.
Pair Corralation between Leading Edge and Champion Bear
Assuming the 90 days horizon Leading Edge Materials is expected to generate 0.75 times more return on investment than Champion Bear. However, Leading Edge Materials is 1.32 times less risky than Champion Bear. It trades about -0.04 of its potential returns per unit of risk. Champion Bear Resources is currently generating about -0.21 per unit of risk. If you would invest 7.10 in Leading Edge Materials on August 29, 2024 and sell it today you would lose (0.50) from holding Leading Edge Materials or give up 7.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leading Edge Materials vs. Champion Bear Resources
Performance |
| Timeline |
| Leading Edge Materials |
| Champion Bear Resources |
Leading Edge and Champion Bear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Champion Bear
The main advantage of trading using opposite Leading Edge and Champion Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Champion Bear 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 Champion Bear will offset losses from the drop in Champion Bear's long position.| Leading Edge vs. Grid Metals Corp | Leading Edge vs. Fireweed Zinc | Leading Edge vs. First American Silver | Leading Edge vs. Australian Strategic Materials |
| Champion Bear vs. Aurelia Metals Limited | Champion Bear vs. Baroyeca Gold Silver | Champion Bear vs. Centaurus Metals Limited | Champion Bear vs. Edison Cobalt 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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