Correlation Between New Age and Grid Metals
Can any of the company-specific risk be diversified away by investing in both New Age 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 New Age and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Age Metals and Grid Metals Corp, you can compare the effects of market volatilities on New Age 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 New Age with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Age and Grid Metals.
Diversification Opportunities for New Age and Grid Metals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Grid is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding New Age Metals 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 New Age 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 New Age Metals 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 New Age i.e., New Age and Grid Metals go up and down completely randomly.
Pair Corralation between New Age and Grid Metals
Assuming the 90 days horizon New Age Metals is expected to generate 1.82 times more return on investment than Grid Metals. However, New Age is 1.82 times more volatile than Grid Metals Corp. It trades about 0.03 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.03 per unit of risk. If you would invest 28.00 in New Age Metals on August 25, 2024 and sell it today you would lose (18.50) from holding New Age Metals or give up 66.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Age Metals vs. Grid Metals Corp
Performance |
| Timeline |
| New Age Metals |
| Grid Metals Corp |
New Age and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Age and Grid Metals
The main advantage of trading using opposite New Age and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Age 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.| New Age vs. First Majestic Silver | New Age vs. Ivanhoe Energy | New Age vs. Orezone Gold Corp | New Age vs. Faraday Copper Corp |
| Grid Metals vs. Stillwater Critical Minerals | Grid Metals vs. Gungnir Resources | Grid Metals vs. Golden Pursuit Resources | Grid Metals vs. New Age Metals |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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