Correlation Between Gander Gold and Labrador Gold

Can any of the company-specific risk be diversified away by investing in both Gander 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 Gander 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 Gander Gold and Labrador Gold Corp, you can compare the effects of market volatilities on Gander 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 Gander Gold with a short position of Labrador Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gander Gold and Labrador Gold.

Diversification Opportunities for Gander Gold and Labrador Gold

0.26

Correlation Coefficient

Gander Gold  Labrador Gold

Modest diversification

The 3 months correlation between Gander and Labrador is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gander Gold 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 Gander 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 Gander Gold 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 Gander Gold i.e., Gander Gold and Labrador Gold go up and down completely randomly.

Pair Corralation between Gander Gold and Labrador Gold

Assuming the 90 days horizon Gander Gold is expected to generate 0.43 times more return on investment than Labrador Gold. However, Gander Gold is 2.32 times less risky than Labrador Gold. It trades about 0.01 of its potential returns per unit of risk. Labrador Gold Corp is currently generating about -0.15 per unit of risk. If you would invest  14.00  in Gander Gold on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Gander Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gander Gold  vs.  Labrador Gold Corp

Gander Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gander Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Labrador Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gander Gold and Labrador Gold

The main advantage of trading using opposite Gander Gold and Labrador Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gander 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.

The idea behind Gander Gold and Labrador 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.