Correlation Between US Gold and Labrador Gold
Can any of the company-specific risk be diversified away by investing in both US Gold 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 US Gold and Labrador Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Gold Corp and Labrador Gold Corp, you can compare the effects of market volatilities on US Gold 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 US Gold with a short position of Labrador Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Gold and Labrador Gold.
Diversification Opportunities for US Gold and Labrador Gold
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USAU and Labrador is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding US Gold Corp 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 US 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 US Gold Corp 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 US Gold i.e., US Gold and Labrador Gold go up and down completely randomly.
Pair Corralation between US Gold and Labrador Gold
Given the investment horizon of 90 days US Gold Corp is expected to generate 0.51 times more return on investment than Labrador Gold. However, US Gold Corp is 1.94 times less risky than Labrador Gold. It trades about 0.1 of its potential returns per unit of risk. Labrador Gold Corp is currently generating about -0.01 per unit of risk. If you would invest 347.00 in US Gold Corp on November 3, 2024 and sell it today you would earn a total of 392.00 from holding US Gold Corp or generate 112.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Gold Corp vs. Labrador Gold Corp
Performance |
| Timeline |
| US Gold Corp |
| Labrador Gold Corp |
US Gold and Labrador Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Gold and Labrador Gold
The main advantage of trading using opposite US Gold and Labrador Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Gold 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.| US Gold vs. Labrador Gold Corp | US Gold vs. Aurion Resources | US Gold vs. Puma Exploration | US Gold vs. Golden Star Resource |
| Labrador Gold vs. Exploits Discovery Corp | Labrador Gold vs. Mako Mining Corp | Labrador Gold vs. Puma Exploration | Labrador Gold vs. Aurion 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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