Correlation Between Labrador Gold and New Found
Can any of the company-specific risk be diversified away by investing in both Labrador Gold and New Found 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 Labrador Gold and New Found into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Gold Corp and New Found Gold, you can compare the effects of market volatilities on Labrador Gold and New Found 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 Labrador Gold with a short position of New Found. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Gold and New Found.
Diversification Opportunities for Labrador Gold and New Found
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Labrador and New is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Gold Corp and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold and Labrador 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 Labrador Gold Corp are associated (or correlated) with New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of Labrador Gold i.e., Labrador Gold and New Found go up and down completely randomly.
Pair Corralation between Labrador Gold and New Found
Assuming the 90 days horizon Labrador Gold Corp is expected to under-perform the New Found. In addition to that, Labrador Gold is 1.68 times more volatile than New Found Gold. It trades about -0.03 of its total potential returns per unit of risk. New Found Gold is currently generating about -0.03 per unit of volatility. If you would invest 546.00 in New Found Gold on September 3, 2024 and sell it today you would lose (293.00) from holding New Found Gold or give up 53.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Gold Corp vs. New Found Gold
Performance |
| Timeline |
| Labrador Gold Corp |
| New Found Gold |
Labrador Gold and New Found Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Gold and New Found
The main advantage of trading using opposite Labrador Gold and New Found positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Gold position performs unexpectedly, New Found 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 New Found will offset losses from the drop in New Found's long position.| Labrador Gold vs. Algoma Steel Group | Labrador Gold vs. Champion Iron | Labrador Gold vs. International Zeolite Corp | Labrador Gold vs. European Residential Real |
| New Found vs. SalesforceCom CDR | New Found vs. Metalero Mining Corp | New Found vs. Mako Mining Corp | New Found vs. Capstone Mining 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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