Correlation Between Lepanto Consolidated and GT Capital

Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and GT Capital 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 Lepanto Consolidated and GT Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lepanto Consolidated Mining and GT Capital Holdings, you can compare the effects of market volatilities on Lepanto Consolidated and GT Capital 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 Lepanto Consolidated with a short position of GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and GT Capital.

Diversification Opportunities for Lepanto Consolidated and GT Capital

0.55

Correlation Coefficient

Lepanto Consolidated  GT Capital

Very weak diversification

The 3 months correlation between Lepanto and GTCAP is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings and Lepanto Consolidated 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 Lepanto Consolidated Mining are associated (or correlated) with GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and GT Capital go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and GT Capital

Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to under-perform the GT Capital. In addition to that, Lepanto Consolidated is 1.48 times more volatile than GT Capital Holdings. It trades about -0.01 of its total potential returns per unit of risk. GT Capital Holdings is currently generating about 0.01 per unit of volatility. If you would invest  62,081  in GT Capital Holdings on October 9, 2024 and sell it today you would earn a total of  1,069  from holding GT Capital Holdings or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  GT Capital Holdings

Lepanto Consolidated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lepanto Consolidated Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GT Capital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GT Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Lepanto Consolidated and GT Capital

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

The idea behind Lepanto Consolidated Mining and GT Capital Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.