Correlation Between Big 5 and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Big 5 and Globex Mining 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 Big 5 and Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and Globex Mining Enterprises, you can compare the effects of market volatilities on Big 5 and Globex Mining 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 Big 5 with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and Globex Mining.
Diversification Opportunities for Big 5 and Globex Mining
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and Globex is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and Big 5 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 Big 5 Sporting are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Big 5 i.e., Big 5 and Globex Mining go up and down completely randomly.
Pair Corralation between Big 5 and Globex Mining
Assuming the 90 days horizon Big 5 is expected to generate 75.26 times less return on investment than Globex Mining. In addition to that, Big 5 is 1.59 times more volatile than Globex Mining Enterprises. It trades about 0.0 of its total potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.19 per unit of volatility. If you would invest 55.00 in Globex Mining Enterprises on September 13, 2024 and sell it today you would earn a total of 19.00 from holding Globex Mining Enterprises or generate 34.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big 5 Sporting vs. Globex Mining Enterprises
Performance |
| Timeline |
| Big 5 Sporting |
| Globex Mining Enterprises |
Big 5 and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and Globex Mining
The main advantage of trading using opposite Big 5 and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, Globex Mining 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 Globex Mining will offset losses from the drop in Globex Mining's long position.| Big 5 vs. Superior Plus Corp | Big 5 vs. SIVERS SEMICONDUCTORS AB | Big 5 vs. NorAm Drilling AS | Big 5 vs. Norsk Hydro ASA |
| Globex Mining vs. LPKF Laser Electronics | Globex Mining vs. Methode Electronics | Globex Mining vs. BRIT AMER TOBACCO | Globex Mining vs. Japan Tobacco |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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