Correlation Between Lundin Gold and Fortune Bay
Can any of the company-specific risk be diversified away by investing in both Lundin 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 Lundin 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 Lundin Gold and Fortune Bay Corp, you can compare the effects of market volatilities on Lundin 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 Lundin Gold with a short position of Fortune Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Gold and Fortune Bay.
Diversification Opportunities for Lundin Gold and Fortune Bay
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lundin and Fortune is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Gold 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 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 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 Lundin Gold i.e., Lundin Gold and Fortune Bay go up and down completely randomly.
Pair Corralation between Lundin Gold and Fortune Bay
Assuming the 90 days horizon Lundin Gold is expected to generate 1.79 times less return on investment than Fortune Bay. But when comparing it to its historical volatility, Lundin Gold is 2.4 times less risky than Fortune Bay. It trades about 0.37 of its potential returns per unit of risk. Fortune Bay Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Fortune Bay Corp on November 28, 2024 and sell it today you would earn a total of 6.00 from holding Fortune Bay Corp or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lundin Gold vs. Fortune Bay Corp
Performance |
| Timeline |
| Lundin Gold |
| Fortune Bay Corp |
Lundin Gold and Fortune Bay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Gold and Fortune Bay
The main advantage of trading using opposite Lundin Gold and Fortune Bay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin 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.| Lundin Gold vs. Sirios Resources | Lundin Gold vs. Q2 Metals Corp | Lundin Gold vs. Tectonic Metals | Lundin Gold vs. Angus Gold |
| Fortune Bay vs. Lundin Gold | Fortune Bay vs. Lumina Gold Corp | Fortune Bay vs. Liberty Gold Corp | Fortune Bay vs. Dynacor Gold Mines |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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