Correlation Between Canoe EIT and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Canoe EIT 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 Canoe EIT and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoe EIT Income and Leading Edge Materials, you can compare the effects of market volatilities on Canoe EIT 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 Canoe EIT with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoe EIT and Leading Edge.
Diversification Opportunities for Canoe EIT and Leading Edge
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canoe and Leading is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Canoe EIT Income 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 Canoe EIT 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 Canoe EIT Income 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 Canoe EIT i.e., Canoe EIT and Leading Edge go up and down completely randomly.
Pair Corralation between Canoe EIT and Leading Edge
Assuming the 90 days trading horizon Canoe EIT Income is expected to generate 0.12 times more return on investment than Leading Edge. However, Canoe EIT Income is 8.61 times less risky than Leading Edge. It trades about 0.18 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.04 per unit of risk. If you would invest 1,422 in Canoe EIT Income on September 28, 2024 and sell it today you would earn a total of 93.00 from holding Canoe EIT Income or generate 6.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Canoe EIT Income vs. Leading Edge Materials
Performance |
Timeline |
Canoe EIT Income |
Leading Edge Materials |
Canoe EIT and Leading Edge Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canoe EIT and Leading Edge
The main advantage of trading using opposite Canoe EIT and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoe EIT 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.Canoe EIT vs. Orca Energy Group | Canoe EIT vs. Rogers Communications | Canoe EIT vs. Aclara Resources | Canoe EIT vs. Buhler Industries |
Leading Edge vs. Monarca Minerals | Leading Edge vs. Outcrop Gold Corp | Leading Edge vs. Grande Portage Resources | Leading Edge vs. Klondike Silver 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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