Correlation Between Bell Financial and Globe Metals
Can any of the company-specific risk be diversified away by investing in both Bell Financial 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 Bell Financial and Globe Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Financial Group and Globe Metals Mining, you can compare the effects of market volatilities on Bell Financial 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 Bell Financial with a short position of Globe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Financial and Globe Metals.
Diversification Opportunities for Bell Financial and Globe Metals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bell and Globe is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bell Financial Group 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 Bell Financial 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 Bell Financial Group 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 Bell Financial i.e., Bell Financial and Globe Metals go up and down completely randomly.
Pair Corralation between Bell Financial and Globe Metals
Assuming the 90 days trading horizon Bell Financial is expected to generate 2.29 times less return on investment than Globe Metals. But when comparing it to its historical volatility, Bell Financial Group is 3.42 times less risky than Globe Metals. It trades about 0.04 of its potential returns per unit of risk. Globe Metals Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3.60 in Globe Metals Mining on November 3, 2024 and sell it today you would lose (0.20) from holding Globe Metals Mining or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bell Financial Group vs. Globe Metals Mining
Performance |
| Timeline |
| Bell Financial Group |
| Globe Metals Mining |
Bell Financial and Globe Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Financial and Globe Metals
The main advantage of trading using opposite Bell Financial and Globe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Financial 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.| Bell Financial vs. Aneka Tambang Tbk | Bell Financial vs. BHP Group Limited | Bell Financial vs. Ecofibre | Bell Financial vs. iShares Global Healthcare |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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