Correlation Between Snowline Gold and Labrador Gold

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

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

Diversification Opportunities for Snowline Gold and Labrador Gold

0.62

Correlation Coefficient

Snowline Gold  Labrador Gold

Poor diversification

The 3 months correlation between Snowline and Labrador is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Snowline Gold Corp and Labrador Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Gold Corp and Snowline 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 Snowline Gold Corp are associated (or correlated) with Labrador Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Gold Corp has no effect on the direction of Snowline Gold i.e., Snowline Gold and Labrador Gold go up and down completely randomly.

Pair Corralation between Snowline Gold and Labrador Gold

Assuming the 90 days horizon Snowline Gold Corp is expected to under-perform the Labrador Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Snowline Gold Corp is 3.11 times less risky than Labrador Gold. The otc stock trades about -0.06 of its potential returns per unit of risk. The Labrador Gold Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5.91  in Labrador Gold Corp on September 13, 2024 and sell it today you would lose (1.41) from holding Labrador Gold Corp or give up 23.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Snowline Gold Corp  vs.  Labrador Gold Corp

Snowline Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snowline 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.

Labrador Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic 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 Snowline Gold and Labrador Gold

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

The idea behind Snowline Gold Corp and Labrador 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.