Correlation Between Wesdome Gold and Lumina Gold
Can any of the company-specific risk be diversified away by investing in both Wesdome 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 Wesdome 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 Wesdome Gold Mines and Lumina Gold Corp, you can compare the effects of market volatilities on Wesdome 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 Wesdome Gold with a short position of Lumina Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesdome Gold and Lumina Gold.
Diversification Opportunities for Wesdome Gold and Lumina Gold
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wesdome and Lumina is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines 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 Wesdome 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 Wesdome Gold Mines 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 Wesdome Gold i.e., Wesdome Gold and Lumina Gold go up and down completely randomly.
Pair Corralation between Wesdome Gold and Lumina Gold
Assuming the 90 days horizon Wesdome Gold is expected to generate 4.08 times less return on investment than Lumina Gold. But when comparing it to its historical volatility, Wesdome Gold Mines is 2.46 times less risky than Lumina Gold. It trades about 0.15 of its potential returns per unit of risk. Lumina Gold Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Lumina Gold Corp on November 28, 2024 and sell it today you would earn a total of 9.00 from holding Lumina Gold Corp or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wesdome Gold Mines vs. Lumina Gold Corp
Performance |
| Timeline |
| Wesdome Gold Mines |
| Lumina Gold Corp |
Wesdome Gold and Lumina Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesdome Gold and Lumina Gold
The main advantage of trading using opposite Wesdome Gold and Lumina Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesdome 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.| Wesdome Gold vs. Victoria Gold Corp | Wesdome Gold vs. Cassiar Gold Corp | Wesdome Gold vs. Liberty Gold Corp | Wesdome Gold vs. I 80 Gold Corp |
| Lumina Gold vs. Fortune Bay Corp | Lumina Gold vs. Lundin Gold | Lumina Gold vs. Liberty Gold Corp | Lumina Gold vs. Cerrado Gold |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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