Correlation Between Globe Metals and Ecofibre
Can any of the company-specific risk be diversified away by investing in both Globe Metals and Ecofibre 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 Ecofibre 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 Ecofibre, you can compare the effects of market volatilities on Globe Metals and Ecofibre 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 Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Ecofibre.
Diversification Opportunities for Globe Metals and Ecofibre
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Globe and Ecofibre is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre 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 Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Globe Metals i.e., Globe Metals and Ecofibre go up and down completely randomly.
Pair Corralation between Globe Metals and Ecofibre
Assuming the 90 days trading horizon Globe Metals Mining is expected to generate 0.84 times more return on investment than Ecofibre. However, Globe Metals Mining is 1.19 times less risky than Ecofibre. It trades about 0.01 of its potential returns per unit of risk. Ecofibre is currently generating about -0.02 per unit of risk. If you would invest 7.06 in Globe Metals Mining on October 12, 2024 and sell it today you would lose (2.96) from holding Globe Metals Mining or give up 41.93% 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. Ecofibre
Performance |
| Timeline |
| Globe Metals Mining |
| Ecofibre |
Globe Metals and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Ecofibre
The main advantage of trading using opposite Globe Metals and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| Globe Metals vs. Northern Star Resources | Globe Metals vs. Evolution Mining | Globe Metals vs. Bluescope Steel | Globe Metals vs. De Grey Mining |
| Ecofibre vs. Oceania Healthcare | Ecofibre vs. Peel Mining | Ecofibre vs. BTC Health Limited | Ecofibre vs. Globe Metals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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