Correlation Between Lumina Gold and Gold Royalty

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

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

Diversification Opportunities for Lumina Gold and Gold Royalty

0.87

Correlation Coefficient

Lumina Gold  Gold Royalty

Very poor diversification

The 3 months correlation between Lumina and Gold is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lumina Gold Corp and Gold Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Royalty Corp and Lumina 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 Lumina Gold Corp are associated (or correlated) with Gold Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Royalty Corp has no effect on the direction of Lumina Gold i.e., Lumina Gold and Gold Royalty go up and down completely randomly.

Pair Corralation between Lumina Gold and Gold Royalty

Assuming the 90 days horizon Lumina Gold Corp is expected to generate 1.24 times more return on investment than Gold Royalty. However, Lumina Gold is 1.24 times more volatile than Gold Royalty Corp. It trades about 0.02 of its potential returns per unit of risk. Gold Royalty Corp is currently generating about -0.03 per unit of risk. If you would invest  42.00  in Lumina Gold Corp on October 3, 2024 and sell it today you would earn a total of  5.00  from holding Lumina Gold Corp or generate 11.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Lumina Gold Corp  vs.  Gold Royalty Corp

Lumina Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumina Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Gold Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Lumina Gold and Gold Royalty

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

The idea behind Lumina Gold Corp and Gold Royalty 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.