Correlation Between TRU Precious and Lavras Gold

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

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

Diversification Opportunities for TRU Precious and Lavras Gold

0.19

Correlation Coefficient

TRU Precious  Lavras Gold

Average diversification

The 3 months correlation between TRU and Lavras is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TRU Precious Metals and Lavras Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavras Gold Corp and TRU Precious 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 TRU Precious Metals are associated (or correlated) with Lavras Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavras Gold Corp has no effect on the direction of TRU Precious i.e., TRU Precious and Lavras Gold go up and down completely randomly.

Pair Corralation between TRU Precious and Lavras Gold

Assuming the 90 days horizon TRU Precious Metals is expected to generate 3.21 times more return on investment than Lavras Gold. However, TRU Precious is 3.21 times more volatile than Lavras Gold Corp. It trades about 0.06 of its potential returns per unit of risk. Lavras Gold Corp is currently generating about -0.04 per unit of risk. If you would invest  1.02  in TRU Precious Metals on December 28, 2024 and sell it today you would earn a total of  0.00  from holding TRU Precious Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

TRU Precious Metals  vs.  Lavras Gold Corp

TRU Precious Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TRU Precious Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, TRU Precious reported solid returns over the last few months and may actually be approaching a breakup point.

Lavras Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lavras Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with TRU Precious and Lavras Gold

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

The idea behind TRU Precious Metals and Lavras 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.