Correlation Between Laurentian Bank and Mako Mining

Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and Mako Mining 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 Laurentian Bank and Mako Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Laurentian Bank and Mako Mining Corp, you can compare the effects of market volatilities on Laurentian Bank and Mako Mining 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 Laurentian Bank with a short position of Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and Mako Mining.

Diversification Opportunities for Laurentian Bank and Mako Mining

-0.58

Correlation Coefficient

Laurentian Bank  Mako Mining

Excellent diversification

The 3 months correlation between Laurentian and Mako is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp and Laurentian Bank 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 Laurentian Bank are associated (or correlated) with Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Mako Mining go up and down completely randomly.

Pair Corralation between Laurentian Bank and Mako Mining

Assuming the 90 days horizon Laurentian Bank is expected to generate 0.88 times more return on investment than Mako Mining. However, Laurentian Bank is 1.14 times less risky than Mako Mining. It trades about 0.05 of its potential returns per unit of risk. Mako Mining Corp is currently generating about -0.21 per unit of risk. If you would invest  2,840  in Laurentian Bank on September 22, 2024 and sell it today you would earn a total of  43.00  from holding Laurentian Bank or generate 1.51% return on investment over 90 days.

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

Laurentian Bank  vs.  Mako Mining Corp

Laurentian Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laurentian Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Laurentian Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mako Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Laurentian Bank and Mako Mining

The main advantage of trading using opposite Laurentian Bank and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, Mako Mining 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 Mako Mining will offset losses from the drop in Mako Mining's long position.

The idea behind Laurentian Bank and Mako Mining 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.