Correlation Between Lucara Diamond and AbraSilver Resource
Can any of the company-specific risk be diversified away by investing in both Lucara Diamond and AbraSilver Resource 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 AbraSilver Resource 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 AbraSilver Resource Corp, you can compare the effects of market volatilities on Lucara Diamond and AbraSilver Resource 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 AbraSilver Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucara Diamond and AbraSilver Resource.
Diversification Opportunities for Lucara Diamond and AbraSilver Resource
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lucara and AbraSilver is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp 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 AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and AbraSilver Resource go up and down completely randomly.
Pair Corralation between Lucara Diamond and AbraSilver Resource
Assuming the 90 days horizon Lucara Diamond Corp is expected to generate 1.07 times more return on investment than AbraSilver Resource. However, Lucara Diamond is 1.07 times more volatile than AbraSilver Resource Corp. It trades about 0.11 of its potential returns per unit of risk. AbraSilver Resource Corp is currently generating about -0.06 per unit of risk. If you would invest 35.00 in Lucara Diamond Corp on September 13, 2024 and sell it today you would earn a total of 3.00 from holding Lucara Diamond Corp or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucara Diamond Corp vs. AbraSilver Resource Corp
Performance |
| Timeline |
| Lucara Diamond Corp |
| AbraSilver Resource Corp |
Lucara Diamond and AbraSilver Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucara Diamond and AbraSilver Resource
The main advantage of trading using opposite Lucara Diamond and AbraSilver Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucara Diamond position performs unexpectedly, AbraSilver Resource 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 AbraSilver Resource will offset losses from the drop in AbraSilver Resource's long position.| Lucara Diamond vs. Thunder Mountain Gold | Lucara Diamond vs. Gatos Silver | Lucara Diamond vs. Triple Flag Precious | Lucara Diamond vs. Libero Copper Gold |
| AbraSilver Resource vs. Defiance Silver Corp | AbraSilver Resource vs. Metallic Minerals Corp | AbraSilver Resource vs. Summa Silver Corp | AbraSilver Resource vs. Honey Badger Silver |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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