Correlation Between T Rowe and Lumina Gold
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Lumina Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Lumina Gold Corp, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Lumina Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Lumina Gold.
Diversification Opportunities for T Rowe and Lumina Gold
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RRTLX and Lumina is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Lumina Gold go up and down completely randomly.
Pair Corralation between T Rowe and Lumina Gold
Assuming the 90 days horizon T Rowe Price is expected to generate 0.08 times more return on investment than Lumina Gold. However, T Rowe Price is 13.18 times less risky than Lumina Gold. It trades about 0.34 of its potential returns per unit of risk. Lumina Gold Corp is currently generating about -0.01 per unit of risk. If you would invest 1,245 in T Rowe Price on September 4, 2024 and sell it today you would earn a total of 26.00 from holding T Rowe Price or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
T Rowe Price vs. Lumina Gold Corp
Performance |
| Timeline |
| T Rowe Price |
| Lumina Gold Corp |
T Rowe and Lumina Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Lumina Gold
The main advantage of trading using opposite T Rowe and Lumina Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.The idea behind T Rowe Price and Lumina Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lumina Gold vs. Harmony Gold Mining | Lumina Gold vs. SPACE | Lumina Gold vs. T Rowe Price | Lumina Gold vs. Ampleforth |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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