Correlation Between Great Northern and LGI

Can any of the company-specific risk be diversified away by investing in both Great Northern and LGI 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 Great Northern and LGI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Great Northern Minerals and LGI, you can compare the effects of market volatilities on Great Northern and LGI 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 Great Northern with a short position of LGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Northern and LGI.

Diversification Opportunities for Great Northern and LGI

-0.34

Correlation Coefficient

Great Northern  LGI

Very good diversification

The 3 months correlation between Great and LGI is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Great Northern Minerals and LGI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI and Great Northern 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 Great Northern Minerals are associated (or correlated) with LGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI has no effect on the direction of Great Northern i.e., Great Northern and LGI go up and down completely randomly.

Pair Corralation between Great Northern and LGI

Assuming the 90 days trading horizon Great Northern is expected to generate 16.65 times less return on investment than LGI. In addition to that, Great Northern is 2.52 times more volatile than LGI. It trades about 0.0 of its total potential returns per unit of risk. LGI is currently generating about 0.05 per unit of volatility. If you would invest  280.00  in LGI on September 27, 2024 and sell it today you would earn a total of  15.00  from holding LGI or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Great Northern Minerals  vs.  LGI

Great Northern Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Northern Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Great Northern is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

LGI

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LGI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, LGI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Great Northern and LGI

The main advantage of trading using opposite Great Northern and LGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Northern position performs unexpectedly, LGI 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 LGI will offset losses from the drop in LGI's long position.

The idea behind Great Northern Minerals and LGI 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.