Correlation Between Garibaldi Resources and Prime Meridian

Can any of the company-specific risk be diversified away by investing in both Garibaldi Resources and Prime Meridian 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 Garibaldi Resources and Prime Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Garibaldi Resources and Prime Meridian

-0.01

Correlation Coefficient

Garibaldi Resources  Prime Meridian

Good diversification

The 3 months correlation between Garibaldi and Prime is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Garibaldi Resources Corp and Prime Meridian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Meridian Resources and Garibaldi Resources 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 Garibaldi Resources Corp are associated (or correlated) with Prime Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Meridian Resources has no effect on the direction of Garibaldi Resources i.e., Garibaldi Resources and Prime Meridian go up and down completely randomly.

Pair Corralation between Garibaldi Resources and Prime Meridian

Assuming the 90 days horizon Garibaldi Resources Corp is expected to generate 3.07 times more return on investment than Prime Meridian. However, Garibaldi Resources is 3.07 times more volatile than Prime Meridian Resources. It trades about 0.12 of its potential returns per unit of risk. Prime Meridian Resources is currently generating about -0.2 per unit of risk. If you would invest  4.00  in Garibaldi Resources Corp on September 14, 2024 and sell it today you would lose (0.90) from holding Garibaldi Resources Corp or give up 22.5% of portfolio value over 90 days.

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

Garibaldi Resources Corp  vs.  Prime Meridian Resources

Garibaldi Resources Corp

Risk-Adjusted Performance

6 of 100

Modest

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

Prime Meridian Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Meridian 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.

Pair Trading with Garibaldi Resources and Prime Meridian

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

The idea behind Garibaldi Resources Corp and Prime Meridian 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.