Correlation Between Global Energy and Grid Metals
Can any of the company-specific risk be diversified away by investing in both Global Energy 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 Global Energy and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Energy Metals and Grid Metals Corp, you can compare the effects of market volatilities on Global Energy 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 Global Energy with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Energy and Grid Metals.
Diversification Opportunities for Global Energy and Grid Metals
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Grid is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Global Energy Metals 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 Global Energy 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 Global Energy Metals 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 Global Energy i.e., Global Energy and Grid Metals go up and down completely randomly.
Pair Corralation between Global Energy and Grid Metals
Assuming the 90 days horizon Global Energy Metals is expected to generate 1.52 times more return on investment than Grid Metals. However, Global Energy is 1.52 times more volatile than Grid Metals Corp. It trades about 0.0 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.01 per unit of risk. If you would invest 7.05 in Global Energy Metals on December 4, 2024 and sell it today you would lose (5.94) from holding Global Energy Metals or give up 84.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Global Energy Metals vs. Grid Metals Corp
Performance |
| Timeline |
| Global Energy Metals |
| Grid Metals Corp |
Global Energy and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Energy and Grid Metals
The main advantage of trading using opposite Global Energy and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Energy 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.| Global Energy vs. Golden Goliath Resources | ||
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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