Correlation Between Nickel Mines and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Nickel Mines and Leading Edge 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 Nickel Mines and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nickel Mines Limited and Leading Edge Materials, you can compare the effects of market volatilities on Nickel Mines and Leading Edge 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 Nickel Mines with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nickel Mines and Leading Edge.
Diversification Opportunities for Nickel Mines and Leading Edge
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nickel and Leading is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nickel Mines Limited and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and Nickel Mines 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 Nickel Mines Limited are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Nickel Mines i.e., Nickel Mines and Leading Edge go up and down completely randomly.
Pair Corralation between Nickel Mines and Leading Edge
Assuming the 90 days horizon Nickel Mines is expected to generate 1.24 times less return on investment than Leading Edge. But when comparing it to its historical volatility, Nickel Mines Limited is 1.57 times less risky than Leading Edge. It trades about 0.02 of its potential returns per unit of risk. Leading Edge Materials is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Leading Edge Materials on September 3, 2024 and sell it today you would lose (6.30) from holding Leading Edge Materials or give up 48.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nickel Mines Limited vs. Leading Edge Materials
Performance |
| Timeline |
| Nickel Mines Limited |
| Leading Edge Materials |
Nickel Mines and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nickel Mines and Leading Edge
The main advantage of trading using opposite Nickel Mines and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nickel Mines position performs unexpectedly, Leading Edge 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 Leading Edge will offset losses from the drop in Leading Edge's long position.| Nickel Mines vs. IGO Limited | Nickel Mines vs. Qubec Nickel Corp | Nickel Mines vs. Mineral Resources Limited | Nickel Mines vs. Surge Copper Corp |
| Leading Edge vs. Grid Metals Corp | Leading Edge vs. Fireweed Zinc | Leading Edge vs. First American Silver | Leading Edge vs. Australian Strategic Materials |
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 CEOs Directory module to screen CEOs from public companies around the world.
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