Correlation Between Globe Metals and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Globe Metals and Aristocrat Leisure 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 Globe Metals and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Metals Mining and Aristocrat Leisure, you can compare the effects of market volatilities on Globe Metals and Aristocrat Leisure 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 Globe Metals with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Aristocrat Leisure.
Diversification Opportunities for Globe Metals and Aristocrat Leisure
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Globe and Aristocrat is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and Globe 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 Globe Metals Mining are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Globe Metals i.e., Globe Metals and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Globe Metals and Aristocrat Leisure
Assuming the 90 days trading horizon Globe Metals Mining is expected to under-perform the Aristocrat Leisure. In addition to that, Globe Metals is 3.13 times more volatile than Aristocrat Leisure. It trades about -0.01 of its total potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.09 per unit of volatility. If you would invest 6,676 in Aristocrat Leisure on September 15, 2024 and sell it today you would earn a total of 162.00 from holding Aristocrat Leisure or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Metals Mining vs. Aristocrat Leisure
Performance |
| Timeline |
| Globe Metals Mining |
| Aristocrat Leisure |
Globe Metals and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Aristocrat Leisure
The main advantage of trading using opposite Globe Metals and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Globe Metals vs. Dicker Data | Globe Metals vs. Lendlease Group | Globe Metals vs. Hansen Technologies | Globe Metals vs. Advanced Braking Technology |
| Aristocrat Leisure vs. Lendlease Group | Aristocrat Leisure vs. Carlton Investments | Aristocrat Leisure vs. MFF Capital Investments | Aristocrat Leisure vs. Super Retail Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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