Correlation Between Grid Metals and Core Assets

Can any of the company-specific risk be diversified away by investing in both Grid Metals and Core Assets 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 Grid Metals and Core Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Grid Metals and Core Assets

-0.58

Correlation Coefficient

Grid Metals  Core Assets

Excellent diversification

The 3 months correlation between Grid and Core is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Core Assets Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Assets Corp and Grid 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 Grid Metals Corp are associated (or correlated) with Core Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Assets Corp has no effect on the direction of Grid Metals i.e., Grid Metals and Core Assets go up and down completely randomly.

Pair Corralation between Grid Metals and Core Assets

Assuming the 90 days horizon Grid Metals Corp is expected to generate 0.99 times more return on investment than Core Assets. However, Grid Metals Corp is 1.01 times less risky than Core Assets. It trades about 0.05 of its potential returns per unit of risk. Core Assets Corp is currently generating about 0.02 per unit of risk. If you would invest  2.55  in Grid Metals Corp on December 27, 2024 and sell it today you would earn a total of  0.13  from holding Grid Metals Corp or generate 5.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Grid Metals Corp  vs.  Core Assets Corp

Grid Metals Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Grid Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Core Assets Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Core Assets Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Core Assets may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grid Metals and Core Assets

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

The idea behind Grid Metals Corp and Core Assets Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.