Correlation Between Yerbae Brands and Labrador Iron

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

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

Diversification Opportunities for Yerbae Brands and Labrador Iron

0.33

Correlation Coefficient

Yerbae Brands  Labrador Iron

Weak diversification

The 3 months correlation between Yerbae and Labrador is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Yerbae Brands Corp and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and Yerbae Brands 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 Yerbae Brands Corp are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Yerbae Brands i.e., Yerbae Brands and Labrador Iron go up and down completely randomly.

Pair Corralation between Yerbae Brands and Labrador Iron

Assuming the 90 days trading horizon Yerbae Brands Corp is expected to under-perform the Labrador Iron. In addition to that, Yerbae Brands is 5.6 times more volatile than Labrador Iron Ore. It trades about -0.03 of its total potential returns per unit of risk. Labrador Iron Ore is currently generating about -0.01 per unit of volatility. If you would invest  3,329  in Labrador Iron Ore on October 4, 2024 and sell it today you would lose (436.00) from holding Labrador Iron Ore or give up 13.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.76%
Values	Daily Returns

Yerbae Brands Corp  vs.  Labrador Iron Ore

Yerbae Brands Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yerbae Brands Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Yerbae Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Labrador Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Yerbae Brands and Labrador Iron

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

The idea behind Yerbae Brands Corp and Labrador Iron Ore 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.