Correlation Between Loncor Resources and Silver Bull
Can any of the company-specific risk be diversified away by investing in both Loncor Resources and Silver Bull 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 Loncor Resources and Silver Bull into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loncor Resources and Silver Bull Resources, you can compare the effects of market volatilities on Loncor Resources and Silver Bull 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 Loncor Resources with a short position of Silver Bull. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loncor Resources and Silver Bull.
Diversification Opportunities for Loncor Resources and Silver Bull
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Loncor and Silver is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Loncor Resources and Silver Bull Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Bull Resources and Loncor Resources 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 Loncor Resources are associated (or correlated) with Silver Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Bull Resources has no effect on the direction of Loncor Resources i.e., Loncor Resources and Silver Bull go up and down completely randomly.
Pair Corralation between Loncor Resources and Silver Bull
Assuming the 90 days horizon Loncor Resources is expected to generate 0.75 times more return on investment than Silver Bull. However, Loncor Resources is 1.33 times less risky than Silver Bull. It trades about 0.1 of its potential returns per unit of risk. Silver Bull Resources is currently generating about 0.02 per unit of risk. If you would invest 45.00 in Loncor Resources on September 23, 2024 and sell it today you would earn a total of 5.00 from holding Loncor Resources or generate 11.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Loncor Resources vs. Silver Bull Resources
Performance |
Timeline |
Loncor Resources |
Silver Bull Resources |
Loncor Resources and Silver Bull Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Loncor Resources and Silver Bull
The main advantage of trading using opposite Loncor Resources and Silver Bull positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loncor Resources position performs unexpectedly, Silver Bull 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 Silver Bull will offset losses from the drop in Silver Bull's long position.Loncor Resources vs. Wildsky Resources | Loncor Resources vs. Q Gold Resources | Loncor Resources vs. Plato Gold Corp | Loncor Resources vs. MAS Gold Corp |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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