Correlation Between Labrador Gold and White Gold
Can any of the company-specific risk be diversified away by investing in both Labrador Gold and White 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 Labrador Gold and White Gold 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 White Gold Corp, you can compare the effects of market volatilities on Labrador Gold and White 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 Labrador Gold with a short position of White Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Gold and White Gold.
Diversification Opportunities for Labrador Gold and White Gold
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Labrador and White is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Gold Corp and White Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Gold Corp 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 White Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Gold Corp has no effect on the direction of Labrador Gold i.e., Labrador Gold and White Gold go up and down completely randomly.
Pair Corralation between Labrador Gold and White Gold
Assuming the 90 days horizon Labrador Gold Corp is expected to under-perform the White Gold. But the stock apears to be less risky and, when comparing its historical volatility, Labrador Gold Corp is 1.06 times less risky than White Gold. The stock trades about -0.38 of its potential returns per unit of risk. The White Gold Corp is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 26.00 in White Gold Corp on August 26, 2024 and sell it today you would lose (4.00) from holding White Gold Corp or give up 15.38% 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. White Gold Corp
Performance |
| Timeline |
| Labrador Gold Corp |
| White Gold Corp |
Labrador Gold and White Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Gold and White Gold
The main advantage of trading using opposite Labrador Gold and White Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Gold position performs unexpectedly, White 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 White Gold will offset losses from the drop in White Gold's long position.| Labrador Gold vs. Canadian General Investments | Labrador Gold vs. Contagious Gaming | Labrador Gold vs. Plaza Retail REIT | Labrador Gold vs. Upstart Investments |
| White Gold vs. Sokoman Minerals Corp | White Gold vs. Royal Road Minerals | White Gold vs. Labrador 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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