Correlation Between Fidelity Minerals and Grid Metals

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

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

Diversification Opportunities for Fidelity Minerals and Grid Metals

0.74

Correlation Coefficient

Fidelity Minerals  Grid Metals

Poor diversification

The 3 months correlation between Fidelity and Grid is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Minerals Corp and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp and Fidelity Minerals 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 Fidelity Minerals Corp are associated (or correlated) with Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of Fidelity Minerals i.e., Fidelity Minerals and Grid Metals go up and down completely randomly.

Pair Corralation between Fidelity Minerals and Grid Metals

Assuming the 90 days horizon Fidelity Minerals Corp is expected to under-perform the Grid Metals. In addition to that, Fidelity Minerals is 1.58 times more volatile than Grid Metals Corp. It trades about -0.04 of its total potential returns per unit of risk. Grid Metals Corp is currently generating about 0.12 per unit of volatility. If you would invest  3.50  in Grid Metals Corp on October 11, 2024 and sell it today you would earn a total of  0.50  from holding Grid Metals Corp or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Fidelity Minerals Corp  vs.  Grid Metals Corp

Fidelity Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Grid Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Grid Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Minerals and Grid Metals

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

The idea behind Fidelity Minerals Corp and Grid Metals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.