Correlation Between Independence Gold and Blue Lagoon
Can any of the company-specific risk be diversified away by investing in both Independence Gold and Blue Lagoon 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 Independence Gold and Blue Lagoon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independence Gold Corp and Blue Lagoon Resources, you can compare the effects of market volatilities on Independence Gold and Blue Lagoon 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 Independence Gold with a short position of Blue Lagoon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Gold and Blue Lagoon.
Diversification Opportunities for Independence Gold and Blue Lagoon
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Independence and Blue is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Independence Gold Corp and Blue Lagoon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Lagoon Resources and Independence Gold 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 Independence Gold Corp are associated (or correlated) with Blue Lagoon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Lagoon Resources has no effect on the direction of Independence Gold i.e., Independence Gold and Blue Lagoon go up and down completely randomly.
Pair Corralation between Independence Gold and Blue Lagoon
Assuming the 90 days horizon Independence Gold Corp is expected to under-perform the Blue Lagoon. But the otc stock apears to be less risky and, when comparing its historical volatility, Independence Gold Corp is 1.83 times less risky than Blue Lagoon. The otc stock trades about -0.15 of its potential returns per unit of risk. The Blue Lagoon Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Blue Lagoon Resources on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Blue Lagoon Resources or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Independence Gold Corp vs. Blue Lagoon Resources
Performance |
| Timeline |
| Independence Gold Corp |
| Blue Lagoon Resources |
Independence Gold and Blue Lagoon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independence Gold and Blue Lagoon
The main advantage of trading using opposite Independence Gold and Blue Lagoon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Gold position performs unexpectedly, Blue Lagoon 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 Blue Lagoon will offset losses from the drop in Blue Lagoon's long position.| Independence Gold vs. South32 Limited | Independence Gold vs. NioCorp Developments Ltd | Independence Gold vs. HUMANA INC | Independence Gold vs. SCOR PK |
| Blue Lagoon vs. Red Pine Exploration | Blue Lagoon vs. Grande Portage Resources | Blue Lagoon vs. White Gold Corp | Blue Lagoon vs. Sitka Gold 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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