Correlation Between Mineral Resources and Grid Metals
Can any of the company-specific risk be diversified away by investing in both Mineral Resources 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 Mineral Resources and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mineral Resources Limited and Grid Metals Corp, you can compare the effects of market volatilities on Mineral Resources 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 Mineral Resources with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mineral Resources and Grid Metals.
Diversification Opportunities for Mineral Resources and Grid Metals
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mineral and Grid is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Mineral Resources Limited 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 Mineral 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 Mineral Resources Limited 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 Mineral Resources i.e., Mineral Resources and Grid Metals go up and down completely randomly.
Pair Corralation between Mineral Resources and Grid Metals
Assuming the 90 days horizon Mineral Resources Limited is expected to under-perform the Grid Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mineral Resources Limited is 1.44 times less risky than Grid Metals. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Grid Metals Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 5.85 in Grid Metals Corp on September 1, 2024 and sell it today you would lose (3.57) from holding Grid Metals Corp or give up 61.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Mineral Resources Limited vs. Grid Metals Corp
Performance |
| Timeline |
| Mineral Resources |
| Grid Metals Corp |
Mineral Resources and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mineral Resources and Grid Metals
The main advantage of trading using opposite Mineral Resources and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mineral Resources 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.| Mineral Resources vs. IGO Limited | Mineral Resources vs. Qubec Nickel Corp | Mineral Resources vs. Nickel Mines Limited | Mineral Resources vs. Surge Copper 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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