Correlation Between Grande Portage and Blue Moon

Can any of the company-specific risk be diversified away by investing in both Grande Portage and Blue Moon 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 Blue Moon 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 Blue Moon Zinc, you can compare the effects of market volatilities on Grande Portage and Blue Moon 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 Blue Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Portage and Blue Moon.

Diversification Opportunities for Grande Portage and Blue Moon

-0.22

Correlation Coefficient

Grande Portage  Blue Moon

Very good diversification

The 3 months correlation between Grande and Blue is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Blue Moon Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon Zinc 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 Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Zinc has no effect on the direction of Grande Portage i.e., Grande Portage and Blue Moon go up and down completely randomly.

Pair Corralation between Grande Portage and Blue Moon

Assuming the 90 days horizon Grande Portage is expected to generate 15.1 times less return on investment than Blue Moon. But when comparing it to its historical volatility, Grande Portage Resources is 1.69 times less risky than Blue Moon. It trades about 0.02 of its potential returns per unit of risk. Blue Moon Zinc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Blue Moon Zinc on September 23, 2024 and sell it today you would earn a total of  31.00  from holding Blue Moon Zinc or generate 620.0% 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.  Blue Moon Zinc

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.

Blue Moon Zinc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Zinc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blue Moon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grande Portage and Blue Moon

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

The idea behind Grande Portage Resources and Blue Moon Zinc 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.