Correlation Between Liberty Gold and Falcon Gold
Can any of the company-specific risk be diversified away by investing in both Liberty Gold and Falcon 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 Liberty Gold and Falcon Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Gold Corp and Falcon Gold Corp, you can compare the effects of market volatilities on Liberty Gold and Falcon 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 Liberty Gold with a short position of Falcon Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Gold and Falcon Gold.
Diversification Opportunities for Liberty Gold and Falcon Gold
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Falcon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Gold Corp and Falcon Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Gold Corp and Liberty 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 Liberty Gold Corp are associated (or correlated) with Falcon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Gold Corp has no effect on the direction of Liberty Gold i.e., Liberty Gold and Falcon Gold go up and down completely randomly.
Pair Corralation between Liberty Gold and Falcon Gold
Assuming the 90 days horizon Liberty Gold is expected to generate 51.12 times less return on investment than Falcon Gold. But when comparing it to its historical volatility, Liberty Gold Corp is 2.39 times less risky than Falcon Gold. It trades about 0.0 of its potential returns per unit of risk. Falcon Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.84 in Falcon Gold Corp on November 19, 2024 and sell it today you would lose (2.18) from holding Falcon Gold Corp or give up 45.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Liberty Gold Corp vs. Falcon Gold Corp
Performance |
| Timeline |
| Liberty Gold Corp |
| Falcon Gold Corp |
Liberty Gold and Falcon Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Gold and Falcon Gold
The main advantage of trading using opposite Liberty Gold and Falcon Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Gold position performs unexpectedly, Falcon 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 Falcon Gold will offset losses from the drop in Falcon Gold's long position.| Liberty Gold vs. Rio2 Limited | Liberty Gold vs. Aurion Resources | Liberty Gold vs. Norsemont Mining | Liberty Gold vs. Minaurum Gold |
| Falcon Gold vs. Altamira Gold Corp | Falcon Gold vs. Precipitate Gold Corp | Falcon Gold vs. KORE Mining | Falcon Gold vs. Puma Exploration |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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