Correlation Between Loncor Resources and Saville Resources
Can any of the company-specific risk be diversified away by investing in both Loncor Resources and Saville Resources 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 Saville Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loncor Resources and Saville Resources, you can compare the effects of market volatilities on Loncor Resources and Saville Resources 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 Saville Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loncor Resources and Saville Resources.
Diversification Opportunities for Loncor Resources and Saville Resources
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Loncor and Saville is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Loncor Resources and Saville Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saville 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 Saville Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saville Resources has no effect on the direction of Loncor Resources i.e., Loncor Resources and Saville Resources go up and down completely randomly.
Pair Corralation between Loncor Resources and Saville Resources
Assuming the 90 days horizon Loncor Resources is expected to under-perform the Saville Resources. But the stock apears to be less risky and, when comparing its historical volatility, Loncor Resources is 3.12 times less risky than Saville Resources. The stock trades about -0.14 of its potential returns per unit of risk. The Saville Resources is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Saville Resources on September 2, 2024 and sell it today you would earn a total of 12.00 from holding Saville Resources or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Loncor Resources vs. Saville Resources
Performance |
| Timeline |
| Loncor Resources |
| Saville Resources |
Loncor Resources and Saville Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loncor Resources and Saville Resources
The main advantage of trading using opposite Loncor Resources and Saville Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loncor Resources position performs unexpectedly, Saville Resources 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 Saville Resources will offset losses from the drop in Saville Resources' long position.| Loncor Resources vs. First Majestic Silver | Loncor Resources vs. Ivanhoe Energy | Loncor Resources vs. Orezone Gold Corp |
| Saville Resources vs. Lion One Metals | Saville Resources vs. Caribbean Utilities | Saville Resources vs. Datable Technology Corp | Saville Resources vs. Canadian Utilities Limited |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |