Correlation Between Lucara Diamond and Mason Graphite
Can any of the company-specific risk be diversified away by investing in both Lucara Diamond and Mason Graphite 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 Lucara Diamond and Mason Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucara Diamond Corp and Mason Graphite, you can compare the effects of market volatilities on Lucara Diamond and Mason Graphite 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 Lucara Diamond with a short position of Mason Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucara Diamond and Mason Graphite.
Diversification Opportunities for Lucara Diamond and Mason Graphite
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lucara and Mason is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lucara Diamond Corp and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite and Lucara Diamond 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 Lucara Diamond Corp are associated (or correlated) with Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of Lucara Diamond i.e., Lucara Diamond and Mason Graphite go up and down completely randomly.
Pair Corralation between Lucara Diamond and Mason Graphite
Assuming the 90 days trading horizon Lucara Diamond Corp is expected to generate 0.55 times more return on investment than Mason Graphite. However, Lucara Diamond Corp is 1.83 times less risky than Mason Graphite. It trades about -0.02 of its potential returns per unit of risk. Mason Graphite is currently generating about -0.02 per unit of risk. If you would invest 62.00 in Lucara Diamond Corp on January 26, 2024 and sell it today you would lose (31.00) from holding Lucara Diamond Corp or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lucara Diamond Corp vs. Mason Graphite
Performance |
| Timeline |
| Lucara Diamond Corp |
| Mason Graphite |
Lucara Diamond and Mason Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucara Diamond and Mason Graphite
The main advantage of trading using opposite Lucara Diamond and Mason Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucara Diamond position performs unexpectedly, Mason Graphite 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 Mason Graphite will offset losses from the drop in Mason Graphite's long position.| Lucara Diamond vs. Slate Grocery REIT | Lucara Diamond vs. Frontera Energy Corp | Lucara Diamond vs. Emera Inc | Lucara Diamond vs. Morguard Real Estate |
| Mason Graphite vs. Noram Lithium Corp | Mason Graphite vs. Argentina Lithium Energy | Mason Graphite vs. Vision Lithium | Mason Graphite vs. Lithium Chile |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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