Correlation Between Great Lakes and Protagenic Therapeutics

Can any of the company-specific risk be diversified away by investing in both Great Lakes and Protagenic Therapeutics 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 Great Lakes and Protagenic Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Great Lakes Dredge and Protagenic Therapeutics, you can compare the effects of market volatilities on Great Lakes and Protagenic Therapeutics 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 Great Lakes with a short position of Protagenic Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Lakes and Protagenic Therapeutics.

Diversification Opportunities for Great Lakes and Protagenic Therapeutics

-0.78

Correlation Coefficient

Great Lakes  Protagenic Therapeutics

Pay attention - limited upside

The 3 months correlation between Great and Protagenic is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and Protagenic Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protagenic Therapeutics and Great Lakes 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 Great Lakes Dredge are associated (or correlated) with Protagenic Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protagenic Therapeutics has no effect on the direction of Great Lakes i.e., Great Lakes and Protagenic Therapeutics go up and down completely randomly.

Pair Corralation between Great Lakes and Protagenic Therapeutics

If you would invest  1,146  in Great Lakes Dredge on August 15, 2024 and sell it today you would earn a total of  58.00  from holding Great Lakes Dredge or generate 5.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	21.74%
Values	Daily Returns

Great Lakes Dredge  vs.  Protagenic Therapeutics

Great Lakes Dredge

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Great Lakes Dredge are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Great Lakes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Protagenic Therapeutics

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Protagenic Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Protagenic Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Great Lakes and Protagenic Therapeutics

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

The idea behind Great Lakes Dredge and Protagenic Therapeutics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.