Correlation Between Clifton Mining and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Clifton Mining and Lucara Diamond 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 Clifton Mining and Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clifton Mining Co and Lucara Diamond Corp, you can compare the effects of market volatilities on Clifton Mining and Lucara Diamond 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 Clifton Mining with a short position of Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clifton Mining and Lucara Diamond.
Diversification Opportunities for Clifton Mining and Lucara Diamond
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Clifton and Lucara is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Clifton Mining Co and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp and Clifton Mining 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 Clifton Mining Co are associated (or correlated) with Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of Clifton Mining i.e., Clifton Mining and Lucara Diamond go up and down completely randomly.
Pair Corralation between Clifton Mining and Lucara Diamond
Given the investment horizon of 90 days Clifton Mining Co is expected to generate 2.83 times more return on investment than Lucara Diamond. However, Clifton Mining is 2.83 times more volatile than Lucara Diamond Corp. It trades about -0.11 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about -0.42 per unit of risk. If you would invest 5.00 in Clifton Mining Co on October 8, 2024 and sell it today you would lose (1.00) from holding Clifton Mining Co or give up 20.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Clifton Mining Co vs. Lucara Diamond Corp
Performance |
Timeline |
Clifton Mining |
Lucara Diamond Corp |
Clifton Mining and Lucara Diamond Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Clifton Mining and Lucara Diamond
The main advantage of trading using opposite Clifton Mining and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clifton Mining position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond's long position.Clifton Mining vs. Mantaro Silver Corp | Clifton Mining vs. Monumental Minerals Corp | Clifton Mining vs. Silver Wolf Exploration | Clifton Mining vs. Riverside Resources |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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