Correlation Between Lupaka Gold and Fortune Bay
Can any of the company-specific risk be diversified away by investing in both Lupaka Gold and Fortune Bay 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 Lupaka Gold and Fortune Bay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupaka Gold Corp and Fortune Bay Corp, you can compare the effects of market volatilities on Lupaka Gold and Fortune Bay 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 Lupaka Gold with a short position of Fortune Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupaka Gold and Fortune Bay.
Diversification Opportunities for Lupaka Gold and Fortune Bay
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lupaka and Fortune is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lupaka Gold Corp and Fortune Bay Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Bay Corp and Lupaka Gold 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 Lupaka Gold Corp are associated (or correlated) with Fortune Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Bay Corp has no effect on the direction of Lupaka Gold i.e., Lupaka Gold and Fortune Bay go up and down completely randomly.
Pair Corralation between Lupaka Gold and Fortune Bay
Assuming the 90 days horizon Lupaka Gold Corp is expected to generate 1.39 times more return on investment than Fortune Bay. However, Lupaka Gold is 1.39 times more volatile than Fortune Bay Corp. It trades about -0.06 of its potential returns per unit of risk. Fortune Bay Corp is currently generating about -0.2 per unit of risk. If you would invest 8.00 in Lupaka Gold Corp on August 30, 2024 and sell it today you would lose (1.00) from holding Lupaka Gold Corp or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lupaka Gold Corp vs. Fortune Bay Corp
Performance |
| Timeline |
| Lupaka Gold Corp |
| Fortune Bay Corp |
Lupaka Gold and Fortune Bay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupaka Gold and Fortune Bay
The main advantage of trading using opposite Lupaka Gold and Fortune Bay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupaka Gold position performs unexpectedly, Fortune Bay 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 Fortune Bay will offset losses from the drop in Fortune Bay's long position.| Lupaka Gold vs. First Majestic Silver | Lupaka Gold vs. Ivanhoe Energy | Lupaka Gold vs. Orezone Gold Corp | Lupaka Gold vs. Faraday Copper Corp |
| Fortune Bay vs. First Majestic Silver | Fortune Bay vs. Ivanhoe Energy | Fortune Bay vs. Orezone Gold Corp | Fortune Bay vs. Faraday Copper 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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