Correlation Between Grid Metals and Global Energy
Can any of the company-specific risk be diversified away by investing in both Grid Metals and Global Energy 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 Grid Metals and Global Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grid Metals Corp and Global Energy Metals, you can compare the effects of market volatilities on Grid Metals and Global Energy 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 Grid Metals with a short position of Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grid Metals and Global Energy.
Diversification Opportunities for Grid Metals and Global Energy
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grid and Global is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Metals and Grid Metals 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 Grid Metals Corp are associated (or correlated) with Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of Grid Metals i.e., Grid Metals and Global Energy go up and down completely randomly.
Pair Corralation between Grid Metals and Global Energy
Assuming the 90 days horizon Grid Metals Corp is expected to under-perform the Global Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Grid Metals Corp is 1.64 times less risky than Global Energy. The otc stock trades about -0.18 of its potential returns per unit of risk. The Global Energy Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Global Energy Metals on August 29, 2024 and sell it today you would earn a total of 0.23 from holding Global Energy Metals or generate 23.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grid Metals Corp vs. Global Energy Metals
Performance |
| Timeline |
| Grid Metals Corp |
| Global Energy Metals |
Grid Metals and Global Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grid Metals and Global Energy
The main advantage of trading using opposite Grid Metals and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grid Metals position performs unexpectedly, Global Energy 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 Global Energy will offset losses from the drop in Global Energy's long position.The idea behind Grid Metals Corp and Global Energy Metals 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.| Global Energy vs. Rockridge Resources | Global Energy vs. Ameriwest Lithium | Global Energy vs. Osisko Metals Incorporated | Global Energy vs. Volt Lithium 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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