Correlation Between Grande Portage and Keweenaw Land

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

Diversification Opportunities for Grande Portage and Keweenaw Land

0.22

Correlation Coefficient

Grande Portage  Keweenaw Land

Modest diversification

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

Pair Corralation between Grande Portage and Keweenaw Land

Assuming the 90 days horizon Grande Portage Resources is expected to under-perform the Keweenaw Land. In addition to that, Grande Portage is 1.98 times more volatile than Keweenaw Land Association. It trades about -0.15 of its total potential returns per unit of risk. Keweenaw Land Association is currently generating about -0.13 per unit of volatility. If you would invest  3,800  in Keweenaw Land Association on September 23, 2024 and sell it today you would lose (300.00) from holding Keweenaw Land Association or give up 7.89% of portfolio value over 90 days.

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

Grande Portage Resources  vs.  Keweenaw Land Association

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Keweenaw Land Association

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keweenaw Land Association are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Keweenaw Land disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grande Portage and Keweenaw Land

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

The idea behind Grande Portage Resources and Keweenaw Land Association 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.