Correlation Between Golden Metal and LBG Media
Can any of the company-specific risk be diversified away by investing in both Golden Metal and LBG Media 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 Golden Metal and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and LBG Media PLC, you can compare the effects of market volatilities on Golden Metal and LBG Media 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 Golden Metal with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and LBG Media.
Diversification Opportunities for Golden Metal and LBG Media
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golden and LBG is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC and Golden Metal 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 Golden Metal Resources are associated (or correlated) with LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Golden Metal i.e., Golden Metal and LBG Media go up and down completely randomly.
Pair Corralation between Golden Metal and LBG Media
Assuming the 90 days trading horizon Golden Metal is expected to generate 2.09 times less return on investment than LBG Media. But when comparing it to its historical volatility, Golden Metal Resources is 1.23 times less risky than LBG Media. It trades about 0.12 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 11,800 in LBG Media PLC on October 11, 2024 and sell it today you would earn a total of 1,300 from holding LBG Media PLC or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. LBG Media PLC
Performance |
| Timeline |
| Golden Metal Resources |
| LBG Media PLC |
Golden Metal and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and LBG Media
The main advantage of trading using opposite Golden Metal and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Golden Metal vs. European Metals Holdings | Golden Metal vs. CNH Industrial NV | Golden Metal vs. Empire Metals Limited | Golden Metal vs. Hochschild Mining plc |
| LBG Media vs. Rheinmetall AG | LBG Media vs. BE Semiconductor Industries | LBG Media vs. EVS Broadcast Equipment | LBG Media vs. Golden Metal 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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