Correlation Between Grande Portage and Lumina Gold

Can any of the company-specific risk be diversified away by investing in both Grande Portage 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 Grande Portage and Lumina Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grande Portage Resources and Lumina Gold Corp, you can compare the effects of market volatilities on Grande Portage 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 Grande Portage with a short position of Lumina Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Portage and Lumina Gold.

Diversification Opportunities for Grande Portage and Lumina Gold

0.46

Correlation Coefficient

Grande Portage  Lumina Gold

Very weak diversification

The 3 months correlation between Grande and Lumina is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources 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 Grande Portage 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 Grande Portage Resources 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 Grande Portage i.e., Grande Portage and Lumina Gold go up and down completely randomly.

Pair Corralation between Grande Portage and Lumina Gold

Assuming the 90 days horizon Grande Portage is expected to generate 7.52 times less return on investment than Lumina Gold. In addition to that, Grande Portage is 1.48 times more volatile than Lumina Gold Corp. It trades about 0.01 of its total potential returns per unit of risk. Lumina Gold Corp is currently generating about 0.12 per unit of volatility. If you would invest  47.00  in Lumina Gold Corp on December 29, 2024 and sell it today you would earn a total of  13.00  from holding Lumina Gold Corp or generate 27.66% return on investment over 90 days.

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

Grande Portage Resources  vs.  Lumina Gold Corp

Grande Portage Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grande Portage Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grande Portage is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lumina Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lumina Gold Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lumina Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grande Portage and Lumina Gold

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

The idea behind Grande Portage Resources and Lumina 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.