Correlation Between Globex Mining and Bank of America
Can any of the company-specific risk be diversified away by investing in both Globex Mining and Bank of America 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 Globex Mining and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and Verizon Communications, you can compare the effects of market volatilities on Globex Mining and Bank of America 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 Globex Mining with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Bank of America.
Diversification Opportunities for Globex Mining and Bank of America
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globex and Bank is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Globex Mining i.e., Globex Mining and Bank of America go up and down completely randomly.
Pair Corralation between Globex Mining and Bank of America
Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 1.65 times more return on investment than Bank of America. However, Globex Mining is 1.65 times more volatile than Verizon Communications. It trades about 0.48 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.03 per unit of risk. If you would invest 78.00 in Globex Mining Enterprises on October 29, 2024 and sell it today you would earn a total of 16.00 from holding Globex Mining Enterprises or generate 20.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Verizon Communications
Performance |
| Timeline |
| Globex Mining Enterprises |
| Verizon Communications |
Globex Mining and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and Bank of America
The main advantage of trading using opposite Globex Mining and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Globex Mining vs. Playtech plc | Globex Mining vs. ANGANG STEEL H | Globex Mining vs. Olympic Steel | Globex Mining vs. The Japan Steel |
| Bank of America vs. MACOM Technology Solutions | Bank of America vs. AIR PRODCHEMICALS | Bank of America vs. Shin Etsu Chemical Co | Bank of America vs. SILICON LABORATOR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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