Correlation Between Grande Portage and Baroyeca Gold

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

By analyzing existing cross correlation between Grande Portage Resources and Baroyeca Gold Silver, you can compare the effects of market volatilities on Grande Portage and Baroyeca Gold 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 Grande Portage with a short position of Baroyeca Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Portage and Baroyeca Gold.

Diversification Opportunities for Grande Portage and Baroyeca Gold

0.32

Correlation Coefficient

Grande Portage  Baroyeca Gold

Weak diversification

The 3 months correlation between Grande and Baroyeca is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Baroyeca Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baroyeca Gold Silver and Grande Portage 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 Grande Portage Resources are associated (or correlated) with Baroyeca Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baroyeca Gold Silver has no effect on the direction of Grande Portage i.e., Grande Portage and Baroyeca Gold go up and down completely randomly.

Pair Corralation between Grande Portage and Baroyeca Gold

Assuming the 90 days horizon Grande Portage is expected to generate 4.75 times less return on investment than Baroyeca Gold. But when comparing it to its historical volatility, Grande Portage Resources is 2.27 times less risky than Baroyeca Gold. It trades about 0.02 of its potential returns per unit of risk. Baroyeca Gold Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.50  in Baroyeca Gold Silver on September 29, 2024 and sell it today you would lose (3.50) from holding Baroyeca Gold Silver or give up 63.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Grande Portage Resources  vs.  Baroyeca Gold Silver

Grande Portage Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Portage Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Baroyeca Gold Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baroyeca Gold Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Grande Portage and Baroyeca Gold

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

The idea behind Grande Portage Resources and Baroyeca Gold Silver 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.