Correlation Between Lucara Diamond and Gen III
Can any of the company-specific risk be diversified away by investing in both Lucara Diamond and Gen III 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 Lucara Diamond and Gen III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucara Diamond Corp and Gen III Oil, you can compare the effects of market volatilities on Lucara Diamond and Gen III 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 Lucara Diamond with a short position of Gen III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucara Diamond and Gen III.
Diversification Opportunities for Lucara Diamond and Gen III
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lucara and Gen is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Gen III Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen III Oil and Lucara Diamond 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 Lucara Diamond Corp are associated (or correlated) with Gen III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen III Oil has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Gen III go up and down completely randomly.
Pair Corralation between Lucara Diamond and Gen III
Assuming the 90 days trading horizon Lucara Diamond Corp is expected to generate 0.68 times more return on investment than Gen III. However, Lucara Diamond Corp is 1.47 times less risky than Gen III. It trades about 0.02 of its potential returns per unit of risk. Gen III Oil is currently generating about -0.02 per unit of risk. If you would invest 52.00 in Lucara Diamond Corp on August 30, 2024 and sell it today you would lose (1.00) from holding Lucara Diamond Corp or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucara Diamond Corp vs. Gen III Oil
Performance |
| Timeline |
| Lucara Diamond Corp |
| Gen III Oil |
Lucara Diamond and Gen III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucara Diamond and Gen III
The main advantage of trading using opposite Lucara Diamond and Gen III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucara Diamond position performs unexpectedly, Gen III 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 Gen III will offset losses from the drop in Gen III's long position.| Lucara Diamond vs. Mountain Province Diamonds | Lucara Diamond vs. Lundin Gold | Lucara Diamond vs. Mandalay Resources Corp | Lucara Diamond vs. North Arrow Minerals |
| Gen III vs. Tsodilo Resources Limited | Gen III vs. Wildsky Resources | Gen III vs. Chatham Rock Phosphate | Gen III vs. Golden Pursuit Resources |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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