Correlation Between Grande Portage and Chatham Rock
Can any of the company-specific risk be diversified away by investing in both Grande Portage and Chatham Rock 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 Grande Portage and Chatham Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grande Portage Resources and Chatham Rock Phosphate, you can compare the effects of market volatilities on Grande Portage and Chatham Rock 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 Grande Portage with a short position of Chatham Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Portage and Chatham Rock.
Diversification Opportunities for Grande Portage and Chatham Rock
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grande and Chatham is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Chatham Rock Phosphate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chatham Rock Phosphate and Grande Portage 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 Grande Portage Resources are associated (or correlated) with Chatham Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chatham Rock Phosphate has no effect on the direction of Grande Portage i.e., Grande Portage and Chatham Rock go up and down completely randomly.
Pair Corralation between Grande Portage and Chatham Rock
Assuming the 90 days horizon Grande Portage Resources is expected to generate 0.76 times more return on investment than Chatham Rock. However, Grande Portage Resources is 1.31 times less risky than Chatham Rock. It trades about 0.02 of its potential returns per unit of risk. Chatham Rock Phosphate is currently generating about 0.01 per unit of risk. If you would invest 20.00 in Grande Portage Resources on September 23, 2024 and sell it today you would lose (2.00) from holding Grande Portage Resources or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grande Portage Resources vs. Chatham Rock Phosphate
Performance |
| Timeline |
| Grande Portage Resources |
| Chatham Rock Phosphate |
Grande Portage and Chatham Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grande Portage and Chatham Rock
The main advantage of trading using opposite Grande Portage and Chatham Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Portage position performs unexpectedly, Chatham Rock 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 Chatham Rock will offset losses from the drop in Chatham Rock's long position.| Grande Portage vs. Wildsky Resources | Grande Portage vs. Q Gold Resources | Grande Portage vs. Plato Gold Corp | Grande Portage vs. MAS Gold Corp |
| Chatham Rock vs. Monarca Minerals | Chatham Rock vs. Outcrop Gold Corp | Chatham Rock vs. Grande Portage Resources | Chatham Rock vs. Klondike Silver 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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