Correlation Between Grid Metals and Nickel Mines
Can any of the company-specific risk be diversified away by investing in both Grid Metals and Nickel Mines 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 Nickel Mines 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 Nickel Mines Limited, you can compare the effects of market volatilities on Grid Metals and Nickel Mines 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 Nickel Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grid Metals and Nickel Mines.
Diversification Opportunities for Grid Metals and Nickel Mines
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grid and Nickel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Nickel Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Mines Limited 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 Nickel Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Mines Limited has no effect on the direction of Grid Metals i.e., Grid Metals and Nickel Mines go up and down completely randomly.
Pair Corralation between Grid Metals and Nickel Mines
Assuming the 90 days horizon Grid Metals Corp is expected to under-perform the Nickel Mines. In addition to that, Grid Metals is 1.77 times more volatile than Nickel Mines Limited. It trades about -0.06 of its total potential returns per unit of risk. Nickel Mines Limited is currently generating about 0.01 per unit of volatility. If you would invest 59.00 in Nickel Mines Limited on September 1, 2024 and sell it today you would lose (4.00) from holding Nickel Mines Limited or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grid Metals Corp vs. Nickel Mines Limited
Performance |
| Timeline |
| Grid Metals Corp |
| Nickel Mines Limited |
Grid Metals and Nickel Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grid Metals and Nickel Mines
The main advantage of trading using opposite Grid Metals and Nickel Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grid Metals position performs unexpectedly, Nickel Mines 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 Nickel Mines will offset losses from the drop in Nickel Mines' long position.The idea behind Grid Metals Corp and Nickel Mines 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.| Nickel Mines vs. IGO Limited | Nickel Mines vs. Qubec Nickel Corp | Nickel Mines vs. Mineral Resources Limited | Nickel Mines 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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