Correlation Between Red Pine and Grande Portage
Can any of the company-specific risk be diversified away by investing in both Red Pine and Grande Portage 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 Red Pine and Grande Portage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Pine Exploration and Grande Portage Resources, you can compare the effects of market volatilities on Red Pine and Grande Portage 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 Red Pine with a short position of Grande Portage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Grande Portage.
Diversification Opportunities for Red Pine and Grande Portage
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Grande is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Grande Portage Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Portage Resources and Red Pine 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 Red Pine Exploration are associated (or correlated) with Grande Portage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Portage Resources has no effect on the direction of Red Pine i.e., Red Pine and Grande Portage go up and down completely randomly.
Pair Corralation between Red Pine and Grande Portage
Assuming the 90 days horizon Red Pine Exploration is expected to generate 0.68 times more return on investment than Grande Portage. However, Red Pine Exploration is 1.46 times less risky than Grande Portage. It trades about -0.11 of its potential returns per unit of risk. Grande Portage Resources is currently generating about -0.16 per unit of risk. If you would invest 11.00 in Red Pine Exploration on October 25, 2024 and sell it today you would lose (3.00) from holding Red Pine Exploration or give up 27.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. Grande Portage Resources
Performance |
| Timeline |
| Red Pine Exploration |
| Grande Portage Resources |
Red Pine and Grande Portage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and Grande Portage
The main advantage of trading using opposite Red Pine and Grande Portage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, Grande Portage 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 Grande Portage will offset losses from the drop in Grande Portage's long position.| Red Pine vs. Endurance Gold | Red Pine vs. Altamira Gold Corp | Red Pine vs. Grande Portage Resources | Red Pine vs. Tectonic Metals |
| Grande Portage vs. Puma Exploration | Grande Portage vs. Sixty North Gold | Grande Portage vs. Red Pine Exploration | Grande Portage vs. Altamira Gold 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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