Correlation Between Grid Metals and Québec Nickel
Can any of the company-specific risk be diversified away by investing in both Grid Metals and Québec Nickel 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 Québec Nickel 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 Qubec Nickel Corp, you can compare the effects of market volatilities on Grid Metals and Québec Nickel 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 Québec Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grid Metals and Québec Nickel.
Diversification Opportunities for Grid Metals and Québec Nickel
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grid and Québec is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Qubec Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qubec Nickel Corp 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 Québec Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qubec Nickel Corp has no effect on the direction of Grid Metals i.e., Grid Metals and Québec Nickel go up and down completely randomly.
Pair Corralation between Grid Metals and Québec Nickel
Assuming the 90 days horizon Grid Metals Corp is expected to generate 0.42 times more return on investment than Québec Nickel. However, Grid Metals Corp is 2.4 times less risky than Québec Nickel. It trades about -0.14 of its potential returns per unit of risk. Qubec Nickel Corp is currently generating about -0.1 per unit of risk. If you would invest 3.25 in Grid Metals Corp on September 1, 2024 and sell it today you would lose (0.97) from holding Grid Metals Corp or give up 29.85% 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. Qubec Nickel Corp
Performance |
| Timeline |
| Grid Metals Corp |
| Qubec Nickel Corp |
Grid Metals and Québec Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grid Metals and Québec Nickel
The main advantage of trading using opposite Grid Metals and Québec Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grid Metals position performs unexpectedly, Québec Nickel 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 Québec Nickel will offset losses from the drop in Québec Nickel's long position.The idea behind Grid Metals Corp and Qubec Nickel Corp 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.| Québec Nickel vs. Norra Metals Corp | Québec Nickel vs. E79 Resources Corp | Québec Nickel vs. Voltage Metals Corp | Québec Nickel vs. Cantex Mine Development |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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