Correlation Between Grid Metals and Mineral Resources
Can any of the company-specific risk be diversified away by investing in both Grid Metals and Mineral Resources 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 Mineral Resources 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 Mineral Resources Limited, you can compare the effects of market volatilities on Grid Metals and Mineral Resources 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 Mineral Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grid Metals and Mineral Resources.
Diversification Opportunities for Grid Metals and Mineral Resources
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grid and Mineral is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Mineral Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources 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 Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of Grid Metals i.e., Grid Metals and Mineral Resources go up and down completely randomly.
Pair Corralation between Grid Metals and Mineral Resources
Assuming the 90 days horizon Grid Metals Corp is expected to generate 1.44 times more return on investment than Mineral Resources. However, Grid Metals is 1.44 times more volatile than Mineral Resources Limited. It trades about -0.06 of its potential returns per unit of risk. Mineral Resources Limited is currently generating about -0.09 per unit of risk. 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 |
Grid Metals Corp vs. Mineral Resources Limited
Performance |
| Timeline |
| Grid Metals Corp |
| Mineral Resources |
Grid Metals and Mineral Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grid Metals and Mineral Resources
The main advantage of trading using opposite Grid Metals and Mineral Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grid Metals position performs unexpectedly, Mineral Resources 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 Mineral Resources will offset losses from the drop in Mineral Resources' long position.The idea behind Grid Metals Corp and Mineral Resources Limited 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.| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| 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 |