Correlation Between Blue Lagoon and White Gold

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Can any of the company-specific risk be diversified away by investing in both Blue Lagoon and White 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 Blue Lagoon and White Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Lagoon Resources and White Gold Corp, you can compare the effects of market volatilities on Blue Lagoon and White 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 Blue Lagoon with a short position of White Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Lagoon and White Gold.

Diversification Opportunities for Blue Lagoon and White Gold

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Blue and White is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Blue Lagoon Resources and White Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Gold Corp and Blue Lagoon 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 Blue Lagoon Resources are associated (or correlated) with White Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Gold Corp has no effect on the direction of Blue Lagoon i.e., Blue Lagoon and White Gold go up and down completely randomly.

Pair Corralation between Blue Lagoon and White Gold

Assuming the 90 days horizon Blue Lagoon Resources is expected to under-perform the White Gold. In addition to that, Blue Lagoon is 1.57 times more volatile than White Gold Corp. It trades about -0.15 of its total potential returns per unit of risk. White Gold Corp is currently generating about 0.02 per unit of volatility. If you would invest  16.00  in White Gold Corp on October 7, 2024 and sell it today you would earn a total of  0.00  from holding White Gold Corp or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Blue Lagoon Resources  vs.  White Gold Corp

 Performance 
       Timeline  
Blue Lagoon Resources 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Blue Lagoon Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Lagoon reported solid returns over the last few months and may actually be approaching a breakup point.
White Gold Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days White Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Blue Lagoon and White Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blue Lagoon and White Gold

The main advantage of trading using opposite Blue Lagoon and White Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Lagoon position performs unexpectedly, White 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 White Gold will offset losses from the drop in White Gold's long position.
The idea behind Blue Lagoon Resources and White 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.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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