Correlation Between Lundin Gold and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Lundin Gold and Lucara Diamond 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 Lundin Gold and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Gold and Lucara Diamond Corp, you can compare the effects of market volatilities on Lundin Gold and Lucara Diamond 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 Lundin Gold with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Gold and Lucara Diamond.
Diversification Opportunities for Lundin Gold and Lucara Diamond
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lundin and Lucara is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Gold and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp and Lundin 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 Lundin Gold are associated (or correlated) with Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of Lundin Gold i.e., Lundin Gold and Lucara Diamond go up and down completely randomly.
Pair Corralation between Lundin Gold and Lucara Diamond
Assuming the 90 days trading horizon Lundin Gold is expected to generate 0.5 times more return on investment than Lucara Diamond. However, Lundin Gold is 1.99 times less risky than Lucara Diamond. It trades about 0.15 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about 0.05 per unit of risk. If you would invest 17,019 in Lundin Gold on October 26, 2024 and sell it today you would earn a total of 9,481 from holding Lundin Gold or generate 55.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Gold vs. Lucara Diamond Corp
Performance |
| Timeline |
| Lundin Gold |
| Lucara Diamond Corp |
Lundin Gold and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Gold and Lucara Diamond
The main advantage of trading using opposite Lundin Gold and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Gold position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond's long position.| Lundin Gold vs. Lundin Mining | Lundin Gold vs. Africa Oil Corp | Lundin Gold vs. International Petroleum | Lundin Gold vs. Boliden AB |
| Lucara Diamond vs. Africa Oil Corp | Lucara Diamond vs. Lundin Gold | Lucara Diamond vs. Lundin Mining | Lucara Diamond vs. Inwido AB |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |