Correlation Between Labrador Gold and New World
Can any of the company-specific risk be diversified away by investing in both Labrador Gold and New World 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 Labrador Gold and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Gold Corp and New World Gold, you can compare the effects of market volatilities on Labrador Gold and New World 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 Labrador Gold with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Gold and New World.
Diversification Opportunities for Labrador Gold and New World
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Labrador and New is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Gold Corp and New World Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Gold and Labrador 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 Labrador Gold Corp are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Gold has no effect on the direction of Labrador Gold i.e., Labrador Gold and New World go up and down completely randomly.
Pair Corralation between Labrador Gold and New World
Assuming the 90 days horizon Labrador Gold Corp is expected to generate 0.27 times more return on investment than New World. However, Labrador Gold Corp is 3.75 times less risky than New World. It trades about -0.13 of its potential returns per unit of risk. New World Gold is currently generating about -0.21 per unit of risk. If you would invest 5.51 in Labrador Gold Corp on August 25, 2024 and sell it today you would lose (1.01) from holding Labrador Gold Corp or give up 18.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Gold Corp vs. New World Gold
Performance |
| Timeline |
| Labrador Gold Corp |
| New World Gold |
Labrador Gold and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Gold and New World
The main advantage of trading using opposite Labrador Gold and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Gold position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Labrador Gold vs. Exploits Discovery Corp | Labrador Gold vs. Mako Mining Corp | Labrador Gold vs. Puma Exploration | Labrador Gold vs. Aurion Resources |
| New World vs. Aurion Resources | New World vs. Liberty Gold Corp | New World vs. Rio2 Limited | New World vs. Orezone Gold Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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