Correlation Between Grande Portage and Desert Gold

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

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

Diversification Opportunities for Grande Portage and Desert Gold

0.44

Correlation Coefficient

Grande Portage  Desert Gold

Very weak diversification

The 3 months correlation between Grande and Desert is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Desert Gold Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desert Gold Ventures and Grande Portage 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 Grande Portage Resources are associated (or correlated) with Desert Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desert Gold Ventures has no effect on the direction of Grande Portage i.e., Grande Portage and Desert Gold go up and down completely randomly.

Pair Corralation between Grande Portage and Desert Gold

Assuming the 90 days horizon Grande Portage Resources is expected to generate 0.54 times more return on investment than Desert Gold. However, Grande Portage Resources is 1.86 times less risky than Desert Gold. It trades about -0.21 of its potential returns per unit of risk. Desert Gold Ventures is currently generating about -0.14 per unit of risk. If you would invest  22.00  in Grande Portage Resources on September 23, 2024 and sell it today you would lose (4.00) from holding Grande Portage Resources or give up 18.18% of portfolio value over 90 days.

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

Grande Portage Resources  vs.  Desert Gold Ventures

Grande Portage Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Portage Resources 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.

Desert Gold Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desert Gold Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Grande Portage and Desert Gold

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

The idea behind Grande Portage Resources and Desert Gold Ventures 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.