Correlation Between Faraday Copper and Loncor Resources
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Loncor 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 Faraday Copper and Loncor Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faraday Copper Corp and Loncor Resources, you can compare the effects of market volatilities on Faraday Copper and Loncor 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 Faraday Copper with a short position of Loncor Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Loncor Resources.
Diversification Opportunities for Faraday Copper and Loncor Resources
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and Loncor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Loncor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loncor Resources and Faraday Copper 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 Faraday Copper Corp are associated (or correlated) with Loncor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loncor Resources has no effect on the direction of Faraday Copper i.e., Faraday Copper and Loncor Resources go up and down completely randomly.
Pair Corralation between Faraday Copper and Loncor Resources
Assuming the 90 days trading horizon Faraday Copper Corp is expected to under-perform the Loncor Resources. In addition to that, Faraday Copper is 1.12 times more volatile than Loncor Resources. It trades about -0.17 of its total potential returns per unit of risk. Loncor Resources is currently generating about -0.15 per unit of volatility. If you would invest 49.00 in Loncor Resources on September 3, 2024 and sell it today you would lose (3.00) from holding Loncor Resources or give up 6.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Loncor Resources
Performance |
| Timeline |
| Faraday Copper Corp |
| Loncor Resources |
Faraday Copper and Loncor Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Loncor Resources
The main advantage of trading using opposite Faraday Copper and Loncor Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Loncor 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 Loncor Resources will offset losses from the drop in Loncor Resources' long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| Loncor Resources vs. Algoma Steel Group | Loncor Resources vs. Champion Iron | Loncor Resources vs. International Zeolite Corp | Loncor Resources vs. European Residential Real |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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