Correlation Between Gold Terra and Grande Portage

Can any of the company-specific risk be diversified away by investing in both Gold Terra 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 Gold Terra and Grande Portage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold Terra Resource and Grande Portage Resources, you can compare the effects of market volatilities on Gold Terra 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 Gold Terra with a short position of Grande Portage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Terra and Grande Portage.

Diversification Opportunities for Gold Terra and Grande Portage

0.1

Correlation Coefficient

Gold Terra  Grande Portage

Average diversification

The 3 months correlation between Gold and Grande is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gold Terra Resource 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 Gold Terra 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 Gold Terra Resource 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 Gold Terra i.e., Gold Terra and Grande Portage go up and down completely randomly.

Pair Corralation between Gold Terra and Grande Portage

Assuming the 90 days horizon Gold Terra Resource is expected to generate 1.47 times more return on investment than Grande Portage. However, Gold Terra is 1.47 times more volatile than Grande Portage Resources. It trades about 0.04 of its potential returns per unit of risk. Grande Portage Resources is currently generating about -0.09 per unit of risk. If you would invest  4.11  in Gold Terra Resource on September 22, 2024 and sell it today you would earn a total of  0.04  from holding Gold Terra Resource or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gold Terra Resource  vs.  Grande Portage Resources

Gold Terra Resource

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Terra Resource are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Gold Terra reported solid returns over the last few months and may actually be approaching a breakup point.

Grande Portage Resources

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Gold Terra and Grande Portage

The main advantage of trading using opposite Gold Terra and Grande Portage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Terra 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 Gold Terra Resource 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.