Correlation Between Grid Metals and Iconic Minerals

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

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

Diversification Opportunities for Grid Metals and Iconic Minerals

-0.14

Correlation Coefficient

Grid Metals  Iconic Minerals

Good diversification

The 3 months correlation between Grid and Iconic is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Iconic Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iconic Minerals and Grid Metals 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 Grid Metals Corp are associated (or correlated) with Iconic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iconic Minerals has no effect on the direction of Grid Metals i.e., Grid Metals and Iconic Minerals go up and down completely randomly.

Pair Corralation between Grid Metals and Iconic Minerals

Assuming the 90 days trading horizon Grid Metals is expected to generate 10.42 times less return on investment than Iconic Minerals. But when comparing it to its historical volatility, Grid Metals Corp is 2.96 times less risky than Iconic Minerals. It trades about 0.02 of its potential returns per unit of risk. Iconic Minerals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Iconic Minerals on September 3, 2024 and sell it today you would lose (1.00) from holding Iconic Minerals or give up 50.0% of portfolio value over 90 days.

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

Grid Metals Corp  vs.  Iconic Minerals

Grid Metals Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Grid Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Iconic Minerals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iconic Minerals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Iconic Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grid Metals and Iconic Minerals

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

The idea behind Grid Metals Corp and Iconic Minerals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.