Correlation Between Aristocrat Leisure and Globe Metals
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Globe 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 Aristocrat Leisure and Globe Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Globe Metals Mining, you can compare the effects of market volatilities on Aristocrat Leisure and Globe 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 Aristocrat Leisure with a short position of Globe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Globe Metals.
Diversification Opportunities for Aristocrat Leisure and Globe Metals
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aristocrat and Globe is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Globe Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Metals Mining and Aristocrat Leisure 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 Aristocrat Leisure are associated (or correlated) with Globe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Metals Mining has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Globe Metals go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Globe Metals
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 1.0 times less return on investment than Globe Metals. But when comparing it to its historical volatility, Aristocrat Leisure is 3.84 times less risky than Globe Metals. It trades about 0.14 of its potential returns per unit of risk. Globe Metals Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.70 in Globe Metals Mining on September 14, 2024 and sell it today you would earn a total of 0.40 from holding Globe Metals Mining or generate 10.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Aristocrat Leisure vs. Globe Metals Mining
Performance |
| Timeline |
| Aristocrat Leisure |
| Globe Metals Mining |
Aristocrat Leisure and Globe Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Globe Metals
The main advantage of trading using opposite Aristocrat Leisure and Globe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Globe 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 Globe Metals will offset losses from the drop in Globe Metals' long position.| Aristocrat Leisure vs. Energy Resources | Aristocrat Leisure vs. 88 Energy | Aristocrat Leisure vs. Amani Gold | Aristocrat Leisure vs. A1 Investments Resources |
| Globe Metals vs. Northern Star Resources | Globe Metals vs. Evolution Mining | Globe Metals vs. Bluescope Steel | Globe Metals vs. Sandfire Resources NL |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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