Correlation Between Faraday Copper and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Faraday Copper 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 Faraday Copper and Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faraday Copper Corp and Globex Mining Enterprises, you can compare the effects of market volatilities on Faraday Copper 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 Faraday Copper with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Globex Mining.
Diversification Opportunities for Faraday Copper and Globex Mining
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Faraday and Globex is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp 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 Faraday Copper 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 Faraday Copper Corp 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 Faraday Copper i.e., Faraday Copper and Globex Mining go up and down completely randomly.
Pair Corralation between Faraday Copper and Globex Mining
Assuming the 90 days trading horizon Faraday Copper Corp is expected to under-perform the Globex Mining. But the stock apears to be less risky and, when comparing its historical volatility, Faraday Copper Corp is 1.13 times less risky than Globex Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Globex Mining Enterprises is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 103.00 in Globex Mining Enterprises on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Globex Mining Enterprises or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Globex Mining Enterprises
Performance |
| Timeline |
| Faraday Copper Corp |
| Globex Mining Enterprises |
Faraday Copper and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Globex Mining
The main advantage of trading using opposite Faraday Copper and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper 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.The idea behind Faraday Copper Corp and Globex Mining Enterprises 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.| Globex Mining vs. Chibougamau Independent Mines | Globex Mining vs. Entree Resources | Globex Mining vs. Solitario Exploration Royalty | Globex Mining vs. Forsys Metals Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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