Correlation Between Grande Portage and Blue Lagoon

Can any of the company-specific risk be diversified away by investing in both Grande Portage and Blue Lagoon 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 Blue Lagoon 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 Blue Lagoon Resources, you can compare the effects of market volatilities on Grande Portage and Blue Lagoon 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 Blue Lagoon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Portage and Blue Lagoon.

Diversification Opportunities for Grande Portage and Blue Lagoon

-0.13

Correlation Coefficient

Grande Portage  Blue Lagoon

Good diversification

The 3 months correlation between Grande and Blue is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Blue Lagoon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Lagoon Resources 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 Blue Lagoon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Lagoon Resources has no effect on the direction of Grande Portage i.e., Grande Portage and Blue Lagoon go up and down completely randomly.

Pair Corralation between Grande Portage and Blue Lagoon

Assuming the 90 days horizon Grande Portage is expected to generate 1.13 times less return on investment than Blue Lagoon. But when comparing it to its historical volatility, Grande Portage Resources is 1.03 times less risky than Blue Lagoon. It trades about 0.02 of its potential returns per unit of risk. Blue Lagoon Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Blue Lagoon Resources on September 14, 2024 and sell it today you would lose (4.00) from holding Blue Lagoon Resources or give up 26.67% of portfolio value over 90 days.

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

Grande Portage Resources  vs.  Blue Lagoon Resources

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Blue Lagoon Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Lagoon Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Lagoon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grande Portage and Blue Lagoon

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

The idea behind Grande Portage Resources and Blue Lagoon Resources 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.