Correlation Between Xtra Gold and Loncor Resources
Can any of the company-specific risk be diversified away by investing in both Xtra Gold and Loncor Resources 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 Xtra Gold and Loncor Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtra Gold Resources Corp and Loncor Resources, you can compare the effects of market volatilities on Xtra Gold and Loncor Resources 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 Xtra Gold with a short position of Loncor Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtra Gold and Loncor Resources.
Diversification Opportunities for Xtra Gold and Loncor Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtra and Loncor is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Xtra Gold Resources Corp and Loncor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loncor Resources and Xtra 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 Xtra Gold Resources Corp are associated (or correlated) with Loncor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loncor Resources has no effect on the direction of Xtra Gold i.e., Xtra Gold and Loncor Resources go up and down completely randomly.
Pair Corralation between Xtra Gold and Loncor Resources
Assuming the 90 days trading horizon Xtra Gold Resources Corp is expected to generate 0.61 times more return on investment than Loncor Resources. However, Xtra Gold Resources Corp is 1.63 times less risky than Loncor Resources. It trades about 0.08 of its potential returns per unit of risk. Loncor Resources is currently generating about 0.03 per unit of risk. If you would invest 81.00 in Xtra Gold Resources Corp on September 3, 2024 and sell it today you would earn a total of 100.00 from holding Xtra Gold Resources Corp or generate 123.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtra Gold Resources Corp vs. Loncor Resources
Performance |
| Timeline |
| Xtra Gold Resources |
| Loncor Resources |
Xtra Gold and Loncor Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtra Gold and Loncor Resources
The main advantage of trading using opposite Xtra Gold and Loncor Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtra Gold position performs unexpectedly, Loncor Resources 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 Loncor Resources will offset losses from the drop in Loncor Resources' long position.| Xtra Gold vs. Algoma Steel Group | Xtra Gold vs. Champion Iron | Xtra Gold vs. International Zeolite Corp | Xtra Gold vs. European Residential Real |
| Loncor Resources vs. Algoma Steel Group | Loncor Resources vs. Champion Iron | Loncor Resources vs. International Zeolite Corp | Loncor Resources vs. European Residential Real |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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