Correlation Between Atlas Salt and Labrador Gold
Can any of the company-specific risk be diversified away by investing in both Atlas Salt and Labrador 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 Atlas Salt and Labrador Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Salt and Labrador Gold Corp, you can compare the effects of market volatilities on Atlas Salt and Labrador 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 Atlas Salt with a short position of Labrador Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Salt and Labrador Gold.
Diversification Opportunities for Atlas Salt and Labrador Gold
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atlas and Labrador is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Salt and Labrador Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Gold Corp and Atlas Salt 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 Atlas Salt are associated (or correlated) with Labrador Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Gold Corp has no effect on the direction of Atlas Salt i.e., Atlas Salt and Labrador Gold go up and down completely randomly.
Pair Corralation between Atlas Salt and Labrador Gold
Assuming the 90 days trading horizon Atlas Salt is expected to generate 0.63 times more return on investment than Labrador Gold. However, Atlas Salt is 1.6 times less risky than Labrador Gold. It trades about 0.0 of its potential returns per unit of risk. Labrador Gold Corp is currently generating about -0.04 per unit of risk. If you would invest 67.00 in Atlas Salt on August 27, 2024 and sell it today you would lose (6.00) from holding Atlas Salt or give up 8.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Salt vs. Labrador Gold Corp
Performance |
| Timeline |
| Atlas Salt |
| Labrador Gold Corp |
Atlas Salt and Labrador Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Salt and Labrador Gold
The main advantage of trading using opposite Atlas Salt and Labrador Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Salt position performs unexpectedly, Labrador 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 Labrador Gold will offset losses from the drop in Labrador Gold's long position.The idea behind Atlas Salt and Labrador 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.| Labrador Gold vs. First Majestic Silver | Labrador Gold vs. Ivanhoe Energy | Labrador Gold 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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