Correlation Between Leading Edge and Global Energy
Can any of the company-specific risk be diversified away by investing in both Leading Edge and Global Energy 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 Global Energy 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 Global Energy Metals, you can compare the effects of market volatilities on Leading Edge and Global Energy 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 Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Global Energy.
Diversification Opportunities for Leading Edge and Global Energy
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leading and Global is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Metals 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 Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of Leading Edge i.e., Leading Edge and Global Energy go up and down completely randomly.
Pair Corralation between Leading Edge and Global Energy
Assuming the 90 days horizon Leading Edge Materials is expected to under-perform the Global Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Leading Edge Materials is 2.6 times less risky than Global Energy. The otc stock trades about -0.04 of its potential returns per unit of risk. The Global Energy Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Global Energy Metals on August 29, 2024 and sell it today you would earn a total of 0.23 from holding Global Energy Metals or generate 23.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leading Edge Materials vs. Global Energy Metals
Performance |
| Timeline |
| Leading Edge Materials |
| Global Energy Metals |
Leading Edge and Global Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Global Energy
The main advantage of trading using opposite Leading Edge and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Global Energy 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 Global Energy will offset losses from the drop in Global Energy'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 |
| Global Energy vs. Rockridge Resources | Global Energy vs. Ameriwest Lithium | Global Energy vs. Osisko Metals Incorporated | Global Energy vs. Volt Lithium 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| CEOs Directory Screen CEOs from public companies around the world |