Correlation Between Arbor Metals and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Lucara Diamond 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 Arbor Metals and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Metals Corp and Lucara Diamond Corp, you can compare the effects of market volatilities on Arbor Metals and Lucara Diamond 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 Arbor Metals with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Lucara Diamond.
Diversification Opportunities for Arbor Metals and Lucara Diamond
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arbor and Lucara is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp and Arbor Metals 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 Arbor Metals Corp are associated (or correlated) with Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of Arbor Metals i.e., Arbor Metals and Lucara Diamond go up and down completely randomly.
Pair Corralation between Arbor Metals and Lucara Diamond
Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the Lucara Diamond. In addition to that, Arbor Metals is 1.71 times more volatile than Lucara Diamond Corp. It trades about -0.02 of its total potential returns per unit of risk. Lucara Diamond Corp is currently generating about 0.0 per unit of volatility. If you would invest 59.00 in Lucara Diamond Corp on November 1, 2024 and sell it today you would lose (21.00) from holding Lucara Diamond Corp or give up 35.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Metals Corp vs. Lucara Diamond Corp
Performance |
| Timeline |
| Arbor Metals Corp |
| Lucara Diamond Corp |
Arbor Metals and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Metals and Lucara Diamond
The main advantage of trading using opposite Arbor Metals and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond's long position.| Arbor Metals vs. First Majestic Silver | Arbor Metals vs. Ivanhoe Energy | Arbor Metals vs. Flinders Resources Limited | Arbor Metals vs. Orezone Gold Corp |
| Lucara Diamond vs. Reyna Silver Corp | Lucara Diamond vs. Torq Resources | Lucara Diamond vs. iShares Canadian HYBrid | Lucara Diamond vs. Altagas Cum Red |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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