Correlation Between Grande Portage and Tectonic Metals

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

Diversification Opportunities for Grande Portage and Tectonic Metals

0.03

Correlation Coefficient

Grande Portage  Tectonic Metals

Significant diversification

The 3 months correlation between Grande and Tectonic is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Metals 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 Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of Grande Portage i.e., Grande Portage and Tectonic Metals go up and down completely randomly.

Pair Corralation between Grande Portage and Tectonic Metals

Assuming the 90 days horizon Grande Portage is expected to generate 3.31 times less return on investment than Tectonic Metals. In addition to that, Grande Portage is 1.08 times more volatile than Tectonic Metals. It trades about 0.03 of its total potential returns per unit of risk. Tectonic Metals is currently generating about 0.1 per unit of volatility. If you would invest  3.03  in Tectonic Metals on December 30, 2024 and sell it today you would earn a total of  0.81  from holding Tectonic Metals or generate 26.73% return on investment over 90 days.

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

Grande Portage Resources  vs.  Tectonic Metals

Grande Portage Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grande Portage Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grande Portage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tectonic Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tectonic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grande Portage and Tectonic Metals

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

The idea behind Grande Portage Resources and Tectonic Metals 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.