Correlation Between Lundin Gold and Solaris Resources
Can any of the company-specific risk be diversified away by investing in both Lundin Gold and Solaris Resources 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 Lundin Gold and Solaris Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Gold and Solaris Resources, you can compare the effects of market volatilities on Lundin Gold and Solaris Resources 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 Lundin Gold with a short position of Solaris Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Gold and Solaris Resources.
Diversification Opportunities for Lundin Gold and Solaris Resources
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lundin and Solaris is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Gold and Solaris Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Resources and Lundin 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 Lundin Gold are associated (or correlated) with Solaris Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Resources has no effect on the direction of Lundin Gold i.e., Lundin Gold and Solaris Resources go up and down completely randomly.
Pair Corralation between Lundin Gold and Solaris Resources
Assuming the 90 days trading horizon Lundin Gold is expected to generate 0.77 times more return on investment than Solaris Resources. However, Lundin Gold is 1.3 times less risky than Solaris Resources. It trades about 0.15 of its potential returns per unit of risk. Solaris Resources is currently generating about 0.05 per unit of risk. If you would invest 3,290 in Lundin Gold on December 1, 2024 and sell it today you would earn a total of 696.00 from holding Lundin Gold or generate 21.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lundin Gold vs. Solaris Resources
Performance |
Timeline |
Lundin Gold |
Solaris Resources |
Lundin Gold and Solaris Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lundin Gold and Solaris Resources
The main advantage of trading using opposite Lundin Gold and Solaris Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Gold position performs unexpectedly, Solaris Resources 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 Solaris Resources will offset losses from the drop in Solaris Resources' long position.Lundin Gold vs. Osisko Gold Ro | Lundin Gold vs. Dundee Precious Metals | Lundin Gold vs. SSR Mining | Lundin Gold vs. Sandstorm Gold Ltd |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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