Correlation Between GRIFFIN MINING and WisdomTree Investments

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

By analyzing existing cross correlation between GRIFFIN MINING LTD and WisdomTree Investments, you can compare the effects of market volatilities on GRIFFIN MINING and WisdomTree Investments 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 GRIFFIN MINING with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRIFFIN MINING and WisdomTree Investments.

Diversification Opportunities for GRIFFIN MINING and WisdomTree Investments

-0.6

Correlation Coefficient

GRIFFIN MINING  WisdomTree Investments

Excellent diversification

The 3 months correlation between GRIFFIN and WisdomTree is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GRIFFIN MINING LTD and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and GRIFFIN MINING 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 GRIFFIN MINING LTD are associated (or correlated) with WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of GRIFFIN MINING i.e., GRIFFIN MINING and WisdomTree Investments go up and down completely randomly.

Pair Corralation between GRIFFIN MINING and WisdomTree Investments

Assuming the 90 days horizon GRIFFIN MINING is expected to generate 2.28 times less return on investment than WisdomTree Investments. But when comparing it to its historical volatility, GRIFFIN MINING LTD is 1.31 times less risky than WisdomTree Investments. It trades about 0.03 of its potential returns per unit of risk. WisdomTree Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  904.00  in WisdomTree Investments on October 3, 2024 and sell it today you would earn a total of  98.00  from holding WisdomTree Investments or generate 10.84% return on investment over 90 days.

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

GRIFFIN MINING LTD  vs.  WisdomTree Investments

GRIFFIN MINING LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRIFFIN MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GRIFFIN MINING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

WisdomTree Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRIFFIN MINING and WisdomTree Investments

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

The idea behind GRIFFIN MINING LTD and WisdomTree Investments 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.