Correlation Between Granite Ridge and CKX Lands

Can any of the company-specific risk be diversified away by investing in both Granite Ridge and CKX Lands 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 Granite Ridge and CKX Lands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Granite Ridge Resources and CKX Lands, you can compare the effects of market volatilities on Granite Ridge and CKX Lands 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 Granite Ridge with a short position of CKX Lands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and CKX Lands.

Diversification Opportunities for Granite Ridge and CKX Lands

-0.67

Correlation Coefficient

Granite Ridge  CKX Lands

Excellent diversification

The 3 months correlation between Granite and CKX is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and CKX Lands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKX Lands and Granite Ridge 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 Granite Ridge Resources are associated (or correlated) with CKX Lands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKX Lands has no effect on the direction of Granite Ridge i.e., Granite Ridge and CKX Lands go up and down completely randomly.

Pair Corralation between Granite Ridge and CKX Lands

Given the investment horizon of 90 days Granite Ridge Resources is expected to generate 0.94 times more return on investment than CKX Lands. However, Granite Ridge Resources is 1.06 times less risky than CKX Lands. It trades about 0.08 of its potential returns per unit of risk. CKX Lands is currently generating about -0.07 per unit of risk. If you would invest  591.00  in Granite Ridge Resources on September 4, 2024 and sell it today you would earn a total of  50.00  from holding Granite Ridge Resources or generate 8.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	84.38%
Values	Daily Returns

Granite Ridge Resources  vs.  CKX Lands

Granite Ridge Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Ridge Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Granite Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CKX Lands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CKX Lands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Granite Ridge and CKX Lands

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

The idea behind Granite Ridge Resources and CKX Lands 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.