Correlation Between Bonterra Resources and Labrador Gold
Can any of the company-specific risk be diversified away by investing in both Bonterra Resources and Labrador Gold 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 Bonterra Resources and Labrador Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bonterra Resources and Labrador Gold Corp, you can compare the effects of market volatilities on Bonterra Resources and Labrador Gold 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 Bonterra Resources with a short position of Labrador Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonterra Resources and Labrador Gold.
Diversification Opportunities for Bonterra Resources and Labrador Gold
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bonterra and Labrador is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bonterra Resources and Labrador Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Gold Corp and Bonterra Resources 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 Bonterra Resources are associated (or correlated) with Labrador Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Gold Corp has no effect on the direction of Bonterra Resources i.e., Bonterra Resources and Labrador Gold go up and down completely randomly.
Pair Corralation between Bonterra Resources and Labrador Gold
Assuming the 90 days horizon Bonterra Resources is expected to generate 0.85 times more return on investment than Labrador Gold. However, Bonterra Resources is 1.18 times less risky than Labrador Gold. It trades about 0.01 of its potential returns per unit of risk. Labrador Gold Corp is currently generating about -0.02 per unit of risk. If you would invest 28.00 in Bonterra Resources on September 3, 2024 and sell it today you would lose (11.00) from holding Bonterra Resources or give up 39.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bonterra Resources vs. Labrador Gold Corp
Performance |
| Timeline |
| Bonterra Resources |
| Labrador Gold Corp |
Bonterra Resources and Labrador Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bonterra Resources and Labrador Gold
The main advantage of trading using opposite Bonterra Resources and Labrador Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bonterra Resources position performs unexpectedly, Labrador Gold 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 Labrador Gold will offset losses from the drop in Labrador Gold's long position.| Bonterra Resources vs. Advantage Solutions | Bonterra Resources vs. Atlas Corp | Bonterra Resources vs. PureCycle Technologies | Bonterra Resources vs. WM Technology |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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