Correlation Between Liberty Gold and Lumina Gold
Can any of the company-specific risk be diversified away by investing in both Liberty Gold and Lumina 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 Lumina 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 Lumina Gold Corp, you can compare the effects of market volatilities on Liberty Gold and Lumina 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 Lumina Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Gold and Lumina Gold.
Diversification Opportunities for Liberty Gold and Lumina Gold
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Liberty and Lumina is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Gold Corp and Lumina Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumina 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 Lumina Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumina Gold Corp has no effect on the direction of Liberty Gold i.e., Liberty Gold and Lumina Gold go up and down completely randomly.
Pair Corralation between Liberty Gold and Lumina Gold
Assuming the 90 days horizon Liberty Gold is expected to generate 1.6 times less return on investment than Lumina Gold. But when comparing it to its historical volatility, Liberty Gold Corp is 1.11 times less risky than Lumina Gold. It trades about 0.17 of its potential returns per unit of risk. Lumina Gold Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Lumina Gold Corp on November 28, 2024 and sell it today you would earn a total of 9.00 from holding Lumina Gold Corp or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Gold Corp vs. Lumina Gold Corp
Performance |
| Timeline |
| Liberty Gold Corp |
| Lumina Gold Corp |
Liberty Gold and Lumina Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Gold and Lumina Gold
The main advantage of trading using opposite Liberty Gold and Lumina Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Gold position performs unexpectedly, Lumina 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 Lumina Gold will offset losses from the drop in Lumina Gold's long position.| Liberty Gold vs. Rio2 Limited | Liberty Gold vs. Aurion Resources | Liberty Gold vs. Norsemont Mining | Liberty Gold vs. Minaurum Gold |
| Lumina Gold vs. Fortune Bay Corp | Lumina Gold vs. Lundin Gold | Lumina Gold vs. Liberty Gold Corp | Lumina Gold vs. Cerrado Gold |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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