Correlation Between GFG Resources and Grande Portage
Can any of the company-specific risk be diversified away by investing in both GFG Resources 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 GFG Resources and Grande Portage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFG Resources and Grande Portage Resources, you can compare the effects of market volatilities on GFG Resources 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 GFG Resources with a short position of Grande Portage. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFG Resources and Grande Portage.
Diversification Opportunities for GFG Resources and Grande Portage
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GFG and Grande is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GFG Resources 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 GFG 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 GFG Resources 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 GFG Resources i.e., GFG Resources and Grande Portage go up and down completely randomly.
Pair Corralation between GFG Resources and Grande Portage
Assuming the 90 days horizon GFG Resources is expected to generate 0.63 times more return on investment than Grande Portage. However, GFG Resources is 1.59 times less risky than Grande Portage. It trades about 0.08 of its potential returns per unit of risk. Grande Portage Resources is currently generating about 0.04 per unit of risk. If you would invest 6.35 in GFG Resources on September 1, 2024 and sell it today you would earn a total of 4.65 from holding GFG Resources or generate 73.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
GFG Resources vs. Grande Portage Resources
Performance |
| Timeline |
| GFG Resources |
| Grande Portage Resources |
GFG Resources and Grande Portage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFG Resources and Grande Portage
The main advantage of trading using opposite GFG Resources and Grande Portage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFG Resources 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.| GFG Resources vs. Aurion Resources | GFG Resources vs. Rio2 Limited | GFG Resources vs. Palamina Corp | GFG Resources vs. BTU Metals Corp |
| Grande Portage vs. Puma Exploration | Grande Portage vs. Sixty North Gold | Grande Portage vs. Red Pine Exploration | Grande Portage vs. Altamira Gold 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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