Correlation Between Grizzly Discoveries and CAT Strategic

Can any of the company-specific risk be diversified away by investing in both Grizzly Discoveries and CAT Strategic 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 Grizzly Discoveries and CAT Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grizzly Discoveries and CAT Strategic Metals, you can compare the effects of market volatilities on Grizzly Discoveries and CAT Strategic 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 Grizzly Discoveries with a short position of CAT Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grizzly Discoveries and CAT Strategic.

Diversification Opportunities for Grizzly Discoveries and CAT Strategic

0.2

Correlation Coefficient

Grizzly Discoveries  CAT Strategic

Modest diversification

The 3 months correlation between Grizzly and CAT is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Grizzly Discoveries and CAT Strategic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAT Strategic Metals and Grizzly Discoveries 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 Grizzly Discoveries are associated (or correlated) with CAT Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAT Strategic Metals has no effect on the direction of Grizzly Discoveries i.e., Grizzly Discoveries and CAT Strategic go up and down completely randomly.

Pair Corralation between Grizzly Discoveries and CAT Strategic

Assuming the 90 days horizon Grizzly Discoveries is expected to generate 12.9 times less return on investment than CAT Strategic. But when comparing it to its historical volatility, Grizzly Discoveries is 8.33 times less risky than CAT Strategic. It trades about 0.09 of its potential returns per unit of risk. CAT Strategic Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.01  in CAT Strategic Metals on December 28, 2024 and sell it today you would earn a total of  0.14  from holding CAT Strategic Metals or generate 1400.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Grizzly Discoveries  vs.  CAT Strategic Metals

Grizzly Discoveries

Risk-Adjusted Performance

Modest

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

CAT Strategic Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CAT Strategic Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CAT Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grizzly Discoveries and CAT Strategic

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

The idea behind Grizzly Discoveries and CAT Strategic 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.