Correlation Between Leading Edge and TF Bank
Can any of the company-specific risk be diversified away by investing in both Leading Edge and TF Bank 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 TF Bank 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 TF Bank AB, you can compare the effects of market volatilities on Leading Edge and TF Bank 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 TF Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and TF Bank.
Diversification Opportunities for Leading Edge and TF Bank
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leading and TFBANK is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and TF Bank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TF Bank AB 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 TF Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TF Bank AB has no effect on the direction of Leading Edge i.e., Leading Edge and TF Bank go up and down completely randomly.
Pair Corralation between Leading Edge and TF Bank
Assuming the 90 days trading horizon Leading Edge Materials is expected to under-perform the TF Bank. In addition to that, Leading Edge is 1.13 times more volatile than TF Bank AB. It trades about -0.08 of its total potential returns per unit of risk. TF Bank AB is currently generating about 0.16 per unit of volatility. If you would invest 32,700 in TF Bank AB on October 26, 2024 and sell it today you would earn a total of 7,500 from holding TF Bank AB or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leading Edge Materials vs. TF Bank AB
Performance |
| Timeline |
| Leading Edge Materials |
| TF Bank AB |
Leading Edge and TF Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and TF Bank
The main advantage of trading using opposite Leading Edge and TF Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, TF Bank 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 TF Bank will offset losses from the drop in TF Bank's long position.| Leading Edge vs. Boliden AB | Leading Edge vs. Filo Mining Corp | Leading Edge vs. Embracer Group AB | Leading Edge vs. SkiStar AB |
| TF Bank vs. Koninklijke Heijmans NV | TF Bank vs. Resurs Holding AB | TF Bank vs. Trelleborg AB | TF Bank vs. Ferronordic AB |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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