Correlation Between Globe Metals and Australia
Can any of the company-specific risk be diversified away by investing in both Globe Metals and Australia 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 Australia 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 Australia and New, you can compare the effects of market volatilities on Globe Metals and Australia 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 Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Australia.
Diversification Opportunities for Globe Metals and Australia
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Globe and Australia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New 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 Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of Globe Metals i.e., Globe Metals and Australia go up and down completely randomly.
Pair Corralation between Globe Metals and Australia
Assuming the 90 days trading horizon Globe Metals Mining is expected to under-perform the Australia. In addition to that, Globe Metals is 2.34 times more volatile than Australia and New. It trades about -0.15 of its total potential returns per unit of risk. Australia and New is currently generating about -0.28 per unit of volatility. If you would invest 3,130 in Australia and New on September 27, 2024 and sell it today you would lose (256.00) from holding Australia and New or give up 8.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Metals Mining vs. Australia and New
Performance |
| Timeline |
| Globe Metals Mining |
| Australia and New |
Globe Metals and Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Australia
The main advantage of trading using opposite Globe Metals and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Australia 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 Australia will offset losses from the drop in Australia's long position.| Globe Metals vs. Northern Star Resources | Globe Metals vs. Evolution Mining | Globe Metals vs. Bluescope Steel | Globe Metals vs. Aneka Tambang Tbk |
| Australia vs. Globe Metals Mining | Australia vs. EVE Health Group | Australia vs. Health and Plant | Australia vs. Capitol Health |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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