Correlation Between Labrador Iron and Calian Technologies
Can any of the company-specific risk be diversified away by investing in both Labrador Iron and Calian Technologies 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 Iron and Calian Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Iron Ore and Calian Technologies, you can compare the effects of market volatilities on Labrador Iron and Calian Technologies 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 Iron with a short position of Calian Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Calian Technologies.
Diversification Opportunities for Labrador Iron and Calian Technologies
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Labrador and Calian is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and Calian Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calian Technologies and Labrador Iron 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 Iron Ore are associated (or correlated) with Calian Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calian Technologies has no effect on the direction of Labrador Iron i.e., Labrador Iron and Calian Technologies go up and down completely randomly.
Pair Corralation between Labrador Iron and Calian Technologies
Assuming the 90 days trading horizon Labrador Iron Ore is expected to generate 0.45 times more return on investment than Calian Technologies. However, Labrador Iron Ore is 2.2 times less risky than Calian Technologies. It trades about 0.17 of its potential returns per unit of risk. Calian Technologies is currently generating about -0.13 per unit of risk. If you would invest 2,900 in Labrador Iron Ore on September 15, 2024 and sell it today you would earn a total of 76.00 from holding Labrador Iron Ore or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Iron Ore vs. Calian Technologies
Performance |
| Timeline |
| Labrador Iron Ore |
| Calian Technologies |
Labrador Iron and Calian Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and Calian Technologies
The main advantage of trading using opposite Labrador Iron and Calian Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron position performs unexpectedly, Calian Technologies 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 Calian Technologies will offset losses from the drop in Calian Technologies' long position.| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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