Correlation Between Labrador Iron and Sun Lif
Can any of the company-specific risk be diversified away by investing in both Labrador Iron and Sun Lif 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 Sun Lif 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 Sun Lif Non, you can compare the effects of market volatilities on Labrador Iron and Sun Lif 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 Sun Lif. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Sun Lif.
Diversification Opportunities for Labrador Iron and Sun Lif
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Labrador and Sun is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and Sun Lif Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Lif Non 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 Sun Lif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Lif Non has no effect on the direction of Labrador Iron i.e., Labrador Iron and Sun Lif go up and down completely randomly.
Pair Corralation between Labrador Iron and Sun Lif
Assuming the 90 days trading horizon Labrador Iron is expected to generate 2.69 times less return on investment than Sun Lif. In addition to that, Labrador Iron is 1.32 times more volatile than Sun Lif Non. It trades about 0.01 of its total potential returns per unit of risk. Sun Lif Non is currently generating about 0.05 per unit of volatility. If you would invest 1,472 in Sun Lif Non on August 26, 2024 and sell it today you would earn a total of 400.00 from holding Sun Lif Non or generate 27.17% 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. Sun Lif Non
Performance |
| Timeline |
| Labrador Iron Ore |
| Sun Lif Non |
Labrador Iron and Sun Lif Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and Sun Lif
The main advantage of trading using opposite Labrador Iron and Sun Lif positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron position performs unexpectedly, Sun Lif 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 Sun Lif will offset losses from the drop in Sun Lif's long position.| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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 Stocks Directory module to find actively traded stocks across global markets.
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