Correlation Between Leading Edge and Flying Nickel
Can any of the company-specific risk be diversified away by investing in both Leading Edge and Flying Nickel 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 Flying Nickel 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 Flying Nickel Mining, you can compare the effects of market volatilities on Leading Edge and Flying Nickel 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 Flying Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Flying Nickel.
Diversification Opportunities for Leading Edge and Flying Nickel
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Leading and Flying is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Flying Nickel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flying Nickel Mining 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 Flying Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flying Nickel Mining has no effect on the direction of Leading Edge i.e., Leading Edge and Flying Nickel go up and down completely randomly.
Pair Corralation between Leading Edge and Flying Nickel
Assuming the 90 days horizon Leading Edge Materials is expected to under-perform the Flying Nickel. But the otc stock apears to be less risky and, when comparing its historical volatility, Leading Edge Materials is 2.58 times less risky than Flying Nickel. The otc stock trades about -0.08 of its potential returns per unit of risk. The Flying Nickel Mining is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2.97 in Flying Nickel Mining on November 5, 2024 and sell it today you would lose (0.31) from holding Flying Nickel Mining or give up 10.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 73.68% |
| Values | Daily Returns |
Leading Edge Materials vs. Flying Nickel Mining
Performance |
| Timeline |
| Leading Edge Materials |
| Flying Nickel Mining |
Leading Edge and Flying Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Flying Nickel
The main advantage of trading using opposite Leading Edge and Flying Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Flying Nickel 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 Flying Nickel will offset losses from the drop in Flying Nickel'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 |
| Flying Nickel vs. Euro Manganese | Flying Nickel vs. Lithium Australia NL | Flying Nickel vs. Bushveld Minerals Limited | Flying Nickel vs. Core Assets 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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