Correlation Between Loncor Resources and Silver Range
Can any of the company-specific risk be diversified away by investing in both Loncor Resources and Silver Range 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 Loncor Resources and Silver Range into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loncor Resources and Silver Range Resources, you can compare the effects of market volatilities on Loncor Resources and Silver Range 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 Loncor Resources with a short position of Silver Range. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loncor Resources and Silver Range.
Diversification Opportunities for Loncor Resources and Silver Range
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Loncor and Silver is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Loncor Resources and Silver Range Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Range Resources and Loncor Resources 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 Loncor Resources are associated (or correlated) with Silver Range. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Range Resources has no effect on the direction of Loncor Resources i.e., Loncor Resources and Silver Range go up and down completely randomly.
Pair Corralation between Loncor Resources and Silver Range
Assuming the 90 days horizon Loncor Resources is expected to under-perform the Silver Range. But the stock apears to be less risky and, when comparing its historical volatility, Loncor Resources is 2.73 times less risky than Silver Range. The stock trades about -0.14 of its potential returns per unit of risk. The Silver Range Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Silver Range Resources on September 2, 2024 and sell it today you would lose (0.50) from holding Silver Range Resources or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Loncor Resources vs. Silver Range Resources
Performance |
| Timeline |
| Loncor Resources |
| Silver Range Resources |
Loncor Resources and Silver Range Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loncor Resources and Silver Range
The main advantage of trading using opposite Loncor Resources and Silver Range positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loncor Resources position performs unexpectedly, Silver Range 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 Silver Range will offset losses from the drop in Silver Range's long position.| Loncor Resources vs. First Majestic Silver | Loncor Resources vs. Ivanhoe Energy | Loncor Resources vs. Orezone Gold Corp |
| Silver Range vs. Orbit Garant Drilling | Silver Range vs. Quipt Home Medical | Silver Range vs. Canadian Imperial Bank | Silver Range vs. CI Financial 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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