Correlation Between Mason Graphite and Granite Creek

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

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

Diversification Opportunities for Mason Graphite and Granite Creek

-0.45

Correlation Coefficient

Mason Graphite  Granite Creek

Very good diversification

The 3 months correlation between Mason and Granite is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mason Graphite and Granite Creek Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Creek Copper and Mason Graphite 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 Mason Graphite are associated (or correlated) with Granite Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Creek Copper has no effect on the direction of Mason Graphite i.e., Mason Graphite and Granite Creek go up and down completely randomly.

Pair Corralation between Mason Graphite and Granite Creek

Assuming the 90 days horizon Mason Graphite is expected to generate 4.69 times less return on investment than Granite Creek. In addition to that, Mason Graphite is 1.19 times more volatile than Granite Creek Copper. It trades about 0.03 of its total potential returns per unit of risk. Granite Creek Copper is currently generating about 0.15 per unit of volatility. If you would invest  1.10  in Granite Creek Copper on December 22, 2024 and sell it today you would earn a total of  0.90  from holding Granite Creek Copper or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Mason Graphite  vs.  Granite Creek Copper

Mason Graphite

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mason Graphite are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Mason Graphite reported solid returns over the last few months and may actually be approaching a breakup point.

Granite Creek Copper

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Creek Copper are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Granite Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mason Graphite and Granite Creek

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

The idea behind Mason Graphite and Granite Creek Copper 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.