Correlation Between GRIN and UPP
Can any of the company-specific risk be diversified away by investing in both GRIN and UPP 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 GRIN and UPP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GRIN and UPP, you can compare the effects of market volatilities on GRIN and UPP 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 GRIN with a short position of UPP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRIN and UPP.
Diversification Opportunities for GRIN and UPP
Good diversification
The 3 months correlation between GRIN and UPP is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding GRIN and UPP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPP and GRIN 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 GRIN are associated (or correlated) with UPP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPP has no effect on the direction of GRIN i.e., GRIN and UPP go up and down completely randomly.
Pair Corralation between GRIN and UPP
Assuming the 90 days trading horizon GRIN is expected to generate 17.81 times less return on investment than UPP. But when comparing it to its historical volatility, GRIN is 1.73 times less risky than UPP. It trades about 0.01 of its potential returns per unit of risk. UPP is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5.14 in UPP on August 25, 2024 and sell it today you would earn a total of 3.96 from holding UPP or generate 77.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GRIN vs. UPP
Performance |
| Timeline |
| GRIN |
| UPP |
GRIN and UPP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GRIN and UPP
The main advantage of trading using opposite GRIN and UPP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRIN position performs unexpectedly, UPP 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 UPP will offset losses from the drop in UPP's long position.The idea behind GRIN and UPP 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |