Correlation Between Decade Resources and Grid Metals
Can any of the company-specific risk be diversified away by investing in both Decade Resources and Grid Metals 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 Decade Resources and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Decade Resources and Grid Metals Corp, you can compare the effects of market volatilities on Decade Resources and Grid Metals 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 Decade Resources with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decade Resources and Grid Metals.
Diversification Opportunities for Decade Resources and Grid Metals
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Decade and Grid is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Decade Resources and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp and Decade Resources 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 Decade Resources are associated (or correlated) with Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of Decade Resources i.e., Decade Resources and Grid Metals go up and down completely randomly.
Pair Corralation between Decade Resources and Grid Metals
Assuming the 90 days horizon Decade Resources is expected to generate 1.49 times more return on investment than Grid Metals. However, Decade Resources is 1.49 times more volatile than Grid Metals Corp. It trades about -0.01 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.02 per unit of risk. If you would invest 14.00 in Decade Resources on November 9, 2024 and sell it today you would lose (11.50) from holding Decade Resources or give up 82.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Decade Resources vs. Grid Metals Corp
Performance |
| Timeline |
| Decade Resources |
| Grid Metals Corp |
Decade Resources and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Decade Resources and Grid Metals
The main advantage of trading using opposite Decade Resources and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decade Resources position performs unexpectedly, Grid Metals 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 Grid Metals will offset losses from the drop in Grid Metals' long position.| Decade Resources vs. First American Silver | Decade Resources vs. Australian Vanadium Limited | Decade Resources vs. International Lithium Corp | Decade Resources vs. Wealth Minerals |
| Grid Metals vs. Great Western Minerals | Grid Metals vs. StrikePoint Gold | Grid Metals vs. Silver Elephant Mining | Grid Metals vs. Eskay Mining Corp |
Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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