Correlation Between Atlas Corp and Grid Metals

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Can any of the company-specific risk be diversified away by investing in both Atlas Corp 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 Atlas Corp and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Corp and Grid Metals Corp, you can compare the effects of market volatilities on Atlas Corp 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 Atlas Corp with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Corp and Grid Metals.

Diversification Opportunities for Atlas Corp and Grid Metals

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Atlas and Grid is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Corp 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 Atlas Corp 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 Atlas Corp 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 Atlas Corp i.e., Atlas Corp and Grid Metals go up and down completely randomly.

Pair Corralation between Atlas Corp and Grid Metals

Assuming the 90 days horizon Atlas Corp is expected to generate 0.08 times more return on investment than Grid Metals. However, Atlas Corp is 11.91 times less risky than Grid Metals. It trades about 0.09 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.04 per unit of risk. If you would invest  2,159  in Atlas Corp on September 10, 2024 and sell it today you would earn a total of  357.00  from holding Atlas Corp or generate 16.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.72%
ValuesDaily Returns

Atlas Corp  vs.  Grid Metals Corp

 Performance 
       Timeline  
Atlas Corp 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Grid Metals Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grid Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Grid Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Atlas Corp and Grid Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atlas Corp and Grid Metals

The main advantage of trading using opposite Atlas Corp and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Corp 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.
The idea behind Atlas Corp and Grid Metals 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.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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