Correlation Between Outcrop Gold and Lumina Gold
Can any of the company-specific risk be diversified away by investing in both Outcrop Gold and Lumina 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 Outcrop Gold and Lumina Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outcrop Gold Corp and Lumina Gold Corp, you can compare the effects of market volatilities on Outcrop Gold and Lumina 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 Outcrop Gold with a short position of Lumina Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outcrop Gold and Lumina Gold.
Diversification Opportunities for Outcrop Gold and Lumina Gold
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Outcrop and Lumina is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Outcrop Gold Corp and Lumina Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumina Gold Corp and Outcrop 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 Outcrop Gold Corp are associated (or correlated) with Lumina Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumina Gold Corp has no effect on the direction of Outcrop Gold i.e., Outcrop Gold and Lumina Gold go up and down completely randomly.
Pair Corralation between Outcrop Gold and Lumina Gold
Assuming the 90 days horizon Outcrop Gold Corp is expected to under-perform the Lumina Gold. In addition to that, Outcrop Gold is 1.58 times more volatile than Lumina Gold Corp. It trades about -0.07 of its total potential returns per unit of risk. Lumina Gold Corp is currently generating about -0.05 per unit of volatility. If you would invest 53.00 in Lumina Gold Corp on September 3, 2024 and sell it today you would lose (2.00) from holding Lumina Gold Corp or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outcrop Gold Corp vs. Lumina Gold Corp
Performance |
| Timeline |
| Outcrop Gold Corp |
| Lumina Gold Corp |
Outcrop Gold and Lumina Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outcrop Gold and Lumina Gold
The main advantage of trading using opposite Outcrop Gold and Lumina Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outcrop Gold position performs unexpectedly, Lumina 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 Lumina Gold will offset losses from the drop in Lumina Gold's long position.| Outcrop Gold vs. Strikepoint Gold | Outcrop Gold vs. Kootenay Silver | Outcrop Gold vs. Kore Mining | Outcrop Gold vs. Blackrock Silver Corp |
| Lumina Gold vs. Bluestone Resources | Lumina Gold vs. Kore Mining | Lumina Gold vs. Torq Resources | Lumina Gold vs. Regulus Resources |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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