Correlation Between Grande Portage and Nine Mile

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

Diversification Opportunities for Grande Portage and Nine Mile

0.5

Correlation Coefficient

Grande Portage  Nine Mile

Very weak diversification

The 3 months correlation between Grande and Nine is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and Nine Mile Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Mile Metals 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 Nine Mile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Mile Metals has no effect on the direction of Grande Portage i.e., Grande Portage and Nine Mile go up and down completely randomly.

Pair Corralation between Grande Portage and Nine Mile

Assuming the 90 days horizon Grande Portage Resources is expected to generate 0.66 times more return on investment than Nine Mile. However, Grande Portage Resources is 1.52 times less risky than Nine Mile. It trades about 0.03 of its potential returns per unit of risk. Nine Mile Metals is currently generating about 0.0 per unit of risk. If you would invest  15.00  in Grande Portage Resources on September 14, 2024 and sell it today you would lose (1.00) from holding Grande Portage Resources or give up 6.67% of portfolio value over 90 days.

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

Grande Portage Resources  vs.  Nine Mile Metals

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.

Nine Mile Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nine Mile Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Grande Portage and Nine Mile

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

The idea behind Grande Portage Resources and Nine Mile Metals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.