Correlation Between Aura Energy and Laramide Resources
Can any of the company-specific risk be diversified away by investing in both Aura Energy and Laramide Resources 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 Aura Energy and Laramide Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aura Energy Limited and Laramide Resources, you can compare the effects of market volatilities on Aura Energy and Laramide Resources 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 Aura Energy with a short position of Laramide Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Energy and Laramide Resources.
Diversification Opportunities for Aura Energy and Laramide Resources
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aura and Laramide is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aura Energy Limited and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources and Aura Energy 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 Aura Energy Limited are associated (or correlated) with Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of Aura Energy i.e., Aura Energy and Laramide Resources go up and down completely randomly.
Pair Corralation between Aura Energy and Laramide Resources
Assuming the 90 days horizon Aura Energy Limited is expected to generate 2.75 times more return on investment than Laramide Resources. However, Aura Energy is 2.75 times more volatile than Laramide Resources. It trades about 0.09 of its potential returns per unit of risk. Laramide Resources is currently generating about 0.12 per unit of risk. If you would invest 8.00 in Aura Energy Limited on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Aura Energy Limited or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aura Energy Limited vs. Laramide Resources
Performance |
| Timeline |
| Aura Energy Limited |
| Laramide Resources |
Aura Energy and Laramide Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aura Energy and Laramide Resources
The main advantage of trading using opposite Aura Energy and Laramide Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura Energy position performs unexpectedly, Laramide Resources 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 Laramide Resources will offset losses from the drop in Laramide Resources' long position.| Aura Energy vs. Isoenergy | Aura Energy vs. Paladin Energy | Aura Energy vs. F3 Uranium Corp | Aura Energy vs. enCore Energy Corp |
| Laramide Resources vs. Baselode Energy Corp | Laramide Resources vs. Elevate Uranium | Laramide Resources vs. Isoenergy | Laramide Resources vs. Anfield Resources |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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