Correlation Between Loncor Resources and Xtra Gold
Can any of the company-specific risk be diversified away by investing in both Loncor Resources and Xtra 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 Loncor Resources and Xtra Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loncor Resources and Xtra Gold Resources Corp, you can compare the effects of market volatilities on Loncor Resources and Xtra 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 Loncor Resources with a short position of Xtra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loncor Resources and Xtra Gold.
Diversification Opportunities for Loncor Resources and Xtra Gold
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loncor and Xtra is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Loncor Resources and Xtra Gold Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Gold 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 Xtra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Gold Resources has no effect on the direction of Loncor Resources i.e., Loncor Resources and Xtra Gold go up and down completely randomly.
Pair Corralation between Loncor Resources and Xtra Gold
Assuming the 90 days horizon Loncor Resources is expected to generate 1.5 times less return on investment than Xtra Gold. In addition to that, Loncor Resources is 1.63 times more volatile than Xtra Gold Resources Corp. It trades about 0.03 of its total potential returns per unit of risk. Xtra Gold Resources Corp is currently generating about 0.08 per unit of volatility. If you would invest 81.00 in Xtra Gold Resources Corp on September 3, 2024 and sell it today you would earn a total of 100.00 from holding Xtra Gold Resources Corp or generate 123.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loncor Resources vs. Xtra Gold Resources Corp
Performance |
| Timeline |
| Loncor Resources |
| Xtra Gold Resources |
Loncor Resources and Xtra Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loncor Resources and Xtra Gold
The main advantage of trading using opposite Loncor Resources and Xtra Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loncor Resources position performs unexpectedly, Xtra 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 Xtra Gold will offset losses from the drop in Xtra Gold's long position.| Loncor Resources vs. Algoma Steel Group | Loncor Resources vs. Champion Iron | Loncor Resources vs. International Zeolite Corp | Loncor Resources vs. European Residential Real |
| Xtra Gold vs. Algoma Steel Group | Xtra Gold vs. Champion Iron | Xtra Gold vs. International Zeolite Corp | Xtra Gold vs. European Residential Real |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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