Correlation Between Falcon Metals and Globe Metals
Can any of the company-specific risk be diversified away by investing in both Falcon Metals 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 Falcon Metals and Globe Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Globe Metals Mining, you can compare the effects of market volatilities on Falcon Metals 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 Falcon Metals with a short position of Globe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Globe Metals.
Diversification Opportunities for Falcon Metals and Globe Metals
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Falcon and Globe is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals 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 Falcon Metals 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 Falcon Metals 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 Falcon Metals i.e., Falcon Metals and Globe Metals go up and down completely randomly.
Pair Corralation between Falcon Metals and Globe Metals
Assuming the 90 days trading horizon Falcon Metals is expected to generate 1.22 times more return on investment than Globe Metals. However, Falcon Metals is 1.22 times more volatile than Globe Metals Mining. It trades about 0.01 of its potential returns per unit of risk. Globe Metals Mining is currently generating about 0.01 per unit of risk. If you would invest 26.00 in Falcon Metals on October 13, 2024 and sell it today you would lose (13.00) from holding Falcon Metals or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Globe Metals Mining
Performance |
| Timeline |
| Falcon Metals |
| Globe Metals Mining |
Falcon Metals and Globe Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Globe Metals
The main advantage of trading using opposite Falcon Metals and Globe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals 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.| Falcon Metals vs. Platinum Asset Management | Falcon Metals vs. Gold Road Resources | Falcon Metals vs. Commonwealth Bank of | Falcon Metals vs. Wt Financial Group |
| Globe Metals vs. Falcon Metals | Globe Metals vs. Lendlease Group | Globe Metals vs. FireFly Metals | Globe Metals vs. Kip McGrath Education |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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