Correlation Between Globe Metals and Iron Road
Can any of the company-specific risk be diversified away by investing in both Globe Metals and Iron Road 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 Iron Road 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 Iron Road, you can compare the effects of market volatilities on Globe Metals and Iron Road 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 Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Iron Road.
Diversification Opportunities for Globe Metals and Iron Road
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Globe and Iron is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road 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 Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road has no effect on the direction of Globe Metals i.e., Globe Metals and Iron Road go up and down completely randomly.
Pair Corralation between Globe Metals and Iron Road
Assuming the 90 days trading horizon Globe Metals Mining is expected to under-perform the Iron Road. In addition to that, Globe Metals is 2.65 times more volatile than Iron Road. It trades about -0.03 of its total potential returns per unit of risk. Iron Road is currently generating about -0.04 per unit of volatility. If you would invest 5.60 in Iron Road on October 20, 2024 and sell it today you would lose (0.10) from holding Iron Road or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Globe Metals Mining vs. Iron Road
Performance |
| Timeline |
| Globe Metals Mining |
| Iron Road |
Globe Metals and Iron Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Iron Road
The main advantage of trading using opposite Globe Metals and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Iron Road 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 Iron Road will offset losses from the drop in Iron Road's long position.| Globe Metals vs. Iron Road | Globe Metals vs. The Environmental Group | Globe Metals vs. Centaurus Metals | Globe Metals vs. Ironbark Capital |
| Iron Road vs. Homeco Daily Needs | Iron Road vs. Sky Metals | Iron Road vs. ACDC Metals | Iron Road vs. Centrex Metals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |