Correlation Between Garibaldi Resources and Kraken Energy

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

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

Diversification Opportunities for Garibaldi Resources and Kraken Energy

0.36

Correlation Coefficient

Garibaldi Resources  Kraken Energy

Weak diversification

The 3 months correlation between Garibaldi and Kraken is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Garibaldi Resources Corp and Kraken Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Energy Corp and Garibaldi 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 Garibaldi Resources Corp are associated (or correlated) with Kraken Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Energy Corp has no effect on the direction of Garibaldi Resources i.e., Garibaldi Resources and Kraken Energy go up and down completely randomly.

Pair Corralation between Garibaldi Resources and Kraken Energy

Assuming the 90 days horizon Garibaldi Resources Corp is expected to generate 1.26 times more return on investment than Kraken Energy. However, Garibaldi Resources is 1.26 times more volatile than Kraken Energy Corp. It trades about 0.06 of its potential returns per unit of risk. Kraken Energy Corp is currently generating about 0.03 per unit of risk. If you would invest  4.00  in Garibaldi Resources Corp on December 30, 2024 and sell it today you would lose (1.00) from holding Garibaldi Resources Corp or give up 25.0% of portfolio value over 90 days.

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

Garibaldi Resources Corp  vs.  Kraken Energy Corp

Garibaldi Resources Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Garibaldi Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Garibaldi Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Kraken Energy Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kraken Energy Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kraken Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Garibaldi Resources and Kraken Energy

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

The idea behind Garibaldi Resources Corp and Kraken Energy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.