Correlation Between North Arrow and Lundin Gold
Can any of the company-specific risk be diversified away by investing in both North Arrow and Lundin Gold 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 North Arrow and Lundin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Arrow Minerals and Lundin Gold, you can compare the effects of market volatilities on North Arrow and Lundin Gold 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 North Arrow with a short position of Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Arrow and Lundin Gold.
Diversification Opportunities for North Arrow and Lundin Gold
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between North and Lundin is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding North Arrow Minerals and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and North Arrow 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 North Arrow Minerals are associated (or correlated) with Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of North Arrow i.e., North Arrow and Lundin Gold go up and down completely randomly.
Pair Corralation between North Arrow and Lundin Gold
Assuming the 90 days horizon North Arrow Minerals is expected to generate 5.42 times more return on investment than Lundin Gold. However, North Arrow is 5.42 times more volatile than Lundin Gold. It trades about 0.04 of its potential returns per unit of risk. Lundin Gold is currently generating about 0.09 per unit of risk. If you would invest 40.00 in North Arrow Minerals on August 28, 2024 and sell it today you would lose (27.00) from holding North Arrow Minerals or give up 67.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Arrow Minerals vs. Lundin Gold
Performance |
| Timeline |
| North Arrow Minerals |
| Lundin Gold |
North Arrow and Lundin Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Arrow and Lundin Gold
The main advantage of trading using opposite North Arrow and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Arrow position performs unexpectedly, Lundin Gold 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 Lundin Gold will offset losses from the drop in Lundin Gold's long position.| North Arrow vs. First Majestic Silver | North Arrow vs. Ivanhoe Energy | North Arrow vs. Orezone Gold Corp | North Arrow vs. Faraday Copper Corp |
| Lundin Gold vs. Osisko Gold Ro | Lundin Gold vs. Dundee Precious Metals | Lundin Gold vs. SSR Mining | Lundin Gold vs. Sandstorm Gold Ltd |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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