Correlation Between Grande Portage and Magna Mining

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

Diversification Opportunities for Grande Portage and Magna Mining

-0.52

Correlation Coefficient

Grande Portage  Magna Mining

Excellent diversification

The 3 months correlation between Grande and Magna is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining 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 Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Grande Portage i.e., Grande Portage and Magna Mining go up and down completely randomly.

Pair Corralation between Grande Portage and Magna Mining

Assuming the 90 days horizon Grande Portage Resources is expected to under-perform the Magna Mining. In addition to that, Grande Portage is 1.27 times more volatile than Magna Mining. It trades about -0.21 of its total potential returns per unit of risk. Magna Mining is currently generating about -0.03 per unit of volatility. If you would invest  146.00  in Magna Mining on September 24, 2024 and sell it today you would lose (4.00) from holding Magna Mining or give up 2.74% of portfolio value over 90 days.

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

Grande Portage Resources  vs.  Magna Mining

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 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.

Magna Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Magna Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grande Portage and Magna Mining

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

The idea behind Grande Portage Resources and Magna Mining 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.