Correlation Between Leading Edge and Rogers Communications

Can any of the company-specific risk be diversified away by investing in both Leading Edge and Rogers Communications 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 Rogers Communications 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 Rogers Communications, you can compare the effects of market volatilities on Leading Edge and Rogers Communications 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 Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Rogers Communications.

Diversification Opportunities for Leading Edge and Rogers Communications

0.72

Correlation Coefficient

Leading Edge  Rogers Communications

Poor diversification

The 3 months correlation between Leading and Rogers is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Leading Edge i.e., Leading Edge and Rogers Communications go up and down completely randomly.

Pair Corralation between Leading Edge and Rogers Communications

Assuming the 90 days horizon Leading Edge Materials is expected to generate 3.87 times more return on investment than Rogers Communications. However, Leading Edge is 3.87 times more volatile than Rogers Communications. It trades about 0.0 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.03 per unit of risk. If you would invest  21.00  in Leading Edge Materials on October 6, 2024 and sell it today you would lose (11.50) from holding Leading Edge Materials or give up 54.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Leading Edge Materials  vs.  Rogers Communications

Leading Edge Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leading Edge Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Leading Edge and Rogers Communications

The main advantage of trading using opposite Leading Edge and Rogers Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Rogers Communications 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 Rogers Communications will offset losses from the drop in Rogers Communications' long position.

The idea behind Leading Edge Materials and Rogers Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.