Correlation Between First American and Grid Metals

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

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

Diversification Opportunities for First American and Grid Metals

0.11

Correlation Coefficient

First American  Grid Metals

Average diversification

The 3 months correlation between First and Grid is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding First American Silver and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp and First American 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 First American Silver are associated (or correlated) with Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of First American i.e., First American and Grid Metals go up and down completely randomly.

Pair Corralation between First American and Grid Metals

Given the investment horizon of 90 days First American Silver is expected to generate 13.28 times more return on investment than Grid Metals. However, First American is 13.28 times more volatile than Grid Metals Corp. It trades about 0.1 of its potential returns per unit of risk. Grid Metals Corp is currently generating about 0.14 per unit of risk. If you would invest  0.01  in First American Silver on May 21, 2025 and sell it today you would lose (0.01) from holding First American Silver or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

First American Silver  vs.  Grid Metals Corp

First American Silver

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First American Silver are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, First American sustained solid returns over the last few months and may actually be approaching a breakup point.

Grid Metals Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Grid Metals Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Grid Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First American and Grid Metals

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

The idea behind First American Silver and Grid Metals Corp 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.