Correlation Between Edison Cobalt and Grid Metals
Can any of the company-specific risk be diversified away by investing in both Edison Cobalt 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 Edison Cobalt and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison Cobalt Corp and Grid Metals Corp, you can compare the effects of market volatilities on Edison Cobalt 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 Edison Cobalt with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison Cobalt and Grid Metals.
Diversification Opportunities for Edison Cobalt and Grid Metals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edison and Grid is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Edison Cobalt Corp 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 Edison Cobalt 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 Edison Cobalt Corp 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 Edison Cobalt i.e., Edison Cobalt and Grid Metals go up and down completely randomly.
Pair Corralation between Edison Cobalt and Grid Metals
Assuming the 90 days horizon Edison Cobalt Corp is expected to generate 0.78 times more return on investment than Grid Metals. However, Edison Cobalt Corp is 1.29 times less risky than Grid Metals. It trades about -0.11 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.18 per unit of risk. If you would invest 7.93 in Edison Cobalt Corp on August 29, 2024 and sell it today you would lose (1.48) from holding Edison Cobalt Corp or give up 18.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Edison Cobalt Corp vs. Grid Metals Corp
Performance |
| Timeline |
| Edison Cobalt Corp |
| Grid Metals Corp |
Edison Cobalt and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edison Cobalt and Grid Metals
The main advantage of trading using opposite Edison Cobalt and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison Cobalt 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.| Edison Cobalt vs. Rockridge Resources | Edison Cobalt vs. Ameriwest Lithium | Edison Cobalt vs. Osisko Metals Incorporated | Edison Cobalt vs. Volt Lithium 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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