Correlation Between GAIA and GRIN
Can any of the company-specific risk be diversified away by investing in both GAIA and GRIN 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 GAIA and GRIN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAIA and GRIN, you can compare the effects of market volatilities on GAIA and GRIN 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 GAIA with a short position of GRIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAIA and GRIN.
Diversification Opportunities for GAIA and GRIN
Weak diversification
The 3 months correlation between GAIA and GRIN is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GAIA and GRIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIN and GAIA 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 GAIA are associated (or correlated) with GRIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIN has no effect on the direction of GAIA i.e., GAIA and GRIN go up and down completely randomly.
Pair Corralation between GAIA and GRIN
Assuming the 90 days trading horizon GAIA is expected to generate 1.22 times less return on investment than GRIN. In addition to that, GAIA is 2.72 times more volatile than GRIN. It trades about 0.08 of its total potential returns per unit of risk. GRIN is currently generating about 0.27 per unit of volatility. If you would invest 2.63 in GRIN on August 25, 2024 and sell it today you would earn a total of 0.72 from holding GRIN or generate 27.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAIA vs. GRIN
Performance |
| Timeline |
| GAIA |
| GRIN |
GAIA and GRIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAIA and GRIN
The main advantage of trading using opposite GAIA and GRIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAIA position performs unexpectedly, GRIN 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 GRIN will offset losses from the drop in GRIN's long position.The idea behind GAIA and GRIN 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.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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |