Correlation Between Imperial Metals and Grande Portage

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Can any of the company-specific risk be diversified away by investing in both Imperial Metals and Grande Portage 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 Imperial Metals and Grande Portage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Metals and Grande Portage Resources, you can compare the effects of market volatilities on Imperial Metals and Grande Portage 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 Imperial Metals with a short position of Grande Portage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Metals and Grande Portage.

Diversification Opportunities for Imperial Metals and Grande Portage

ImperialGrandeDiversified AwayImperialGrandeDiversified Away100%
0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Imperial and Grande is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Metals and Grande Portage Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Portage Resources and Imperial Metals 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 Imperial Metals are associated (or correlated) with Grande Portage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Portage Resources has no effect on the direction of Imperial Metals i.e., Imperial Metals and Grande Portage go up and down completely randomly.

Pair Corralation between Imperial Metals and Grande Portage

Assuming the 90 days horizon Imperial Metals is expected to under-perform the Grande Portage. But the pink sheet apears to be less risky and, when comparing its historical volatility, Imperial Metals is 2.58 times less risky than Grande Portage. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Grande Portage Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Grande Portage Resources on October 11, 2024 and sell it today you would lose (4.00) from holding Grande Portage Resources or give up 22.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Imperial Metals  vs.  Grande Portage Resources

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -200204060
JavaScript chart by amCharts 3.21.15IPMLF GPTRF
       Timeline  
Imperial Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Imperial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1.21.31.41.51.61.7
Grande Portage Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.150.20.25

Imperial Metals and Grande Portage Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.62-3.46-2.3-1.140.01.02.033.064.095.12 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15IPMLF GPTRF
       Returns  

Pair Trading with Imperial Metals and Grande Portage

The main advantage of trading using opposite Imperial Metals and Grande Portage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Metals position performs unexpectedly, Grande Portage 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 Grande Portage will offset losses from the drop in Grande Portage's long position.
The idea behind Imperial Metals and Grande Portage Resources 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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