Correlation Between Leading Edge and New Energy
Can any of the company-specific risk be diversified away by investing in both Leading Edge and New 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 New 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 New Energy Metals, you can compare the effects of market volatilities on Leading Edge and New 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 New Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and New Energy.
Diversification Opportunities for Leading Edge and New Energy
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leading and New is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and New Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New 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 New Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Energy Metals has no effect on the direction of Leading Edge i.e., Leading Edge and New Energy go up and down completely randomly.
Pair Corralation between Leading Edge and New Energy
If you would invest 31.00 in New Energy Metals on August 29, 2024 and sell it today you would earn a total of 0.00 from holding New Energy Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leading Edge Materials vs. New Energy Metals
Performance |
| Timeline |
| Leading Edge Materials |
| New Energy Metals |
Leading Edge and New Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and New Energy
The main advantage of trading using opposite Leading Edge and New Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, New 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 New Energy will offset losses from the drop in New 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 |
| New Energy vs. Legacy Education | New Energy vs. Apple Inc | New Energy vs. NVIDIA | New Energy vs. Microsoft |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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