Correlation Between Nordic Iron and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Nordic Iron 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 Nordic Iron and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Iron Ore and Leading Edge Materials, you can compare the effects of market volatilities on Nordic Iron 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 Nordic Iron with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and Leading Edge.
Diversification Opportunities for Nordic Iron and Leading Edge
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nordic and Leading is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore 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 Nordic Iron 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 Nordic Iron Ore 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 Nordic Iron i.e., Nordic Iron and Leading Edge go up and down completely randomly.
Pair Corralation between Nordic Iron and Leading Edge
Assuming the 90 days trading horizon Nordic Iron Ore is expected to generate 0.85 times more return on investment than Leading Edge. However, Nordic Iron Ore is 1.18 times less risky than Leading Edge. It trades about -0.01 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.02 per unit of risk. If you would invest 765.00 in Nordic Iron Ore on November 2, 2024 and sell it today you would lose (291.00) from holding Nordic Iron Ore or give up 38.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Iron Ore vs. Leading Edge Materials
Performance |
| Timeline |
| Nordic Iron Ore |
| Leading Edge Materials |
Nordic Iron and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Iron and Leading Edge
The main advantage of trading using opposite Nordic Iron and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Iron 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.| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding |
| Leading Edge vs. Boliden AB | Leading Edge vs. AAC Clyde Space | Leading Edge vs. Tele2 AB | Leading Edge vs. BillerudKorsnas 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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