Correlation Between Grande Portage and Grid Metals

Can any of the company-specific risk be diversified away by investing in both Grande Portage 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 Grande Portage and Grid Metals 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 Grid Metals Corp, you can compare the effects of market volatilities on Grande Portage 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 Grande Portage with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Portage and Grid Metals.

Diversification Opportunities for Grande Portage and Grid Metals

-0.34

Correlation Coefficient

Grande Portage  Grid Metals

Very good diversification

The 3 months correlation between Grande and Grid is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources 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 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 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 Grande Portage i.e., Grande Portage and Grid Metals go up and down completely randomly.

Pair Corralation between Grande Portage and Grid Metals

Assuming the 90 days horizon Grande Portage is expected to generate 12.64 times less return on investment than Grid Metals. But when comparing it to its historical volatility, Grande Portage Resources is 1.73 times less risky than Grid Metals. It trades about 0.01 of its potential returns per unit of risk. Grid Metals Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Grid Metals Corp on December 26, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grande Portage Resources  vs.  Grid Metals Corp

Grande Portage Resources

Risk-Adjusted Performance

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 fairly stable basic indicators, Grande Portage is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Grid Metals Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Metals Corp are ranked lower than 5 (%) 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 Grande Portage and Grid Metals

The main advantage of trading using opposite Grande Portage and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Portage 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 Grande Portage Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.