Correlation Between Faraday Copper and Lundin Gold
Can any of the company-specific risk be diversified away by investing in both Faraday Copper 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 Faraday Copper and Lundin Gold 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 Lundin Gold, you can compare the effects of market volatilities on Faraday Copper 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 Faraday Copper with a short position of Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Lundin Gold.
Diversification Opportunities for Faraday Copper and Lundin Gold
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Faraday and Lundin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold 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 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 Faraday Copper i.e., Faraday Copper and Lundin Gold go up and down completely randomly.
Pair Corralation between Faraday Copper and Lundin Gold
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate about the same return on investment as Lundin Gold. But, Faraday Copper Corp is 1.29 times less risky than Lundin Gold. It trades about -0.07 of its potential returns per unit of risk. Lundin Gold is currently generating about -0.05 per unit of risk. If you would invest 3,345 in Lundin Gold on August 29, 2024 and sell it today you would lose (121.00) from holding Lundin Gold or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Lundin Gold
Performance |
| Timeline |
| Faraday Copper Corp |
| Lundin Gold |
Faraday Copper and Lundin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Lundin Gold
The main advantage of trading using opposite Faraday Copper and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper 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.The idea behind Faraday Copper Corp and Lundin Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lundin Gold vs. Osisko Gold Ro | Lundin Gold vs. Dundee Precious Metals | Lundin Gold vs. SSR Mining | Lundin Gold vs. Sandstorm Gold Ltd |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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