Correlation Between BTU Metals and Lundin Gold
Can any of the company-specific risk be diversified away by investing in both BTU Metals and Lundin 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 BTU Metals and Lundin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTU Metals Corp and Lundin Gold, you can compare the effects of market volatilities on BTU Metals and Lundin 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 BTU Metals with a short position of Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and Lundin Gold.
Diversification Opportunities for BTU Metals and Lundin Gold
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BTU and Lundin is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and BTU 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 BTU Metals Corp are associated (or correlated) with Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of BTU Metals i.e., BTU Metals and Lundin Gold go up and down completely randomly.
Pair Corralation between BTU Metals and Lundin Gold
Assuming the 90 days horizon BTU Metals is expected to generate 1.89 times less return on investment than Lundin Gold. In addition to that, BTU Metals is 3.87 times more volatile than Lundin Gold. It trades about 0.02 of its total potential returns per unit of risk. Lundin Gold is currently generating about 0.16 per unit of volatility. If you would invest 1,446 in Lundin Gold on September 1, 2024 and sell it today you would earn a total of 859.00 from holding Lundin Gold or generate 59.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTU Metals Corp vs. Lundin Gold
Performance |
| Timeline |
| BTU Metals Corp |
| Lundin Gold |
BTU Metals and Lundin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTU Metals and Lundin Gold
The main advantage of trading using opposite BTU Metals and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals position performs unexpectedly, Lundin 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 Lundin Gold will offset losses from the drop in Lundin Gold's long position.| BTU Metals vs. Alaska Air Group | BTU Metals vs. Xtant Medical Holdings | BTU Metals vs. Westinghouse Air Brake | BTU Metals vs. AerSale Corp |
| Lundin Gold vs. Aurion Resources | Lundin Gold vs. Rio2 Limited | Lundin Gold vs. Palamina Corp | Lundin Gold vs. BTU Metals 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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