Correlation Between Globe Metals and Emetals
Can any of the company-specific risk be diversified away by investing in both Globe Metals and Emetals 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 Emetals 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 Emetals, you can compare the effects of market volatilities on Globe Metals and Emetals 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 Emetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Emetals.
Diversification Opportunities for Globe Metals and Emetals
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Globe and Emetals is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Emetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emetals 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 Emetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emetals has no effect on the direction of Globe Metals i.e., Globe Metals and Emetals go up and down completely randomly.
Pair Corralation between Globe Metals and Emetals
Assuming the 90 days trading horizon Globe Metals Mining is expected to under-perform the Emetals. But the stock apears to be less risky and, when comparing its historical volatility, Globe Metals Mining is 1.13 times less risky than Emetals. The stock trades about -0.08 of its potential returns per unit of risk. The Emetals is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 0.50 in Emetals on October 26, 2024 and sell it today you would lose (0.05) from holding Emetals or give up 10.0% 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. Emetals
Performance |
| Timeline |
| Globe Metals Mining |
| Emetals |
Globe Metals and Emetals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Emetals
The main advantage of trading using opposite Globe Metals and Emetals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Emetals 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 Emetals will offset losses from the drop in Emetals' long position.| Globe Metals vs. Viva Leisure | Globe Metals vs. Aristocrat Leisure | Globe Metals vs. Nine Entertainment Co | Globe Metals vs. Genetic Technologies |
| Emetals vs. Northern Star Resources | Emetals vs. Evolution Mining | Emetals vs. Bluescope Steel | Emetals vs. De Grey Mining |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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