Correlation Between Globe Metals and Metro Mining
Can any of the company-specific risk be diversified away by investing in both Globe Metals and Metro Mining 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 Metro Mining 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 Metro Mining, you can compare the effects of market volatilities on Globe Metals and Metro Mining 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 Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Metro Mining.
Diversification Opportunities for Globe Metals and Metro Mining
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Globe and Metro is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining 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 Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of Globe Metals i.e., Globe Metals and Metro Mining go up and down completely randomly.
Pair Corralation between Globe Metals and Metro Mining
Assuming the 90 days trading horizon Globe Metals Mining is expected to under-perform the Metro Mining. In addition to that, Globe Metals is 1.99 times more volatile than Metro Mining. It trades about -0.03 of its total potential returns per unit of risk. Metro Mining is currently generating about 0.05 per unit of volatility. If you would invest 5.60 in Metro Mining on October 20, 2024 and sell it today you would earn a total of 0.10 from holding Metro Mining or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Metals Mining vs. Metro Mining
Performance |
| Timeline |
| Globe Metals Mining |
| Metro Mining |
Globe Metals and Metro Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Metro Mining
The main advantage of trading using opposite Globe Metals and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Metro Mining 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 Metro Mining will offset losses from the drop in Metro Mining's long position.| Globe Metals vs. Iron Road | Globe Metals vs. The Environmental Group | Globe Metals vs. Centaurus Metals | Globe Metals vs. Ironbark Capital |
| Metro Mining vs. Farm Pride Foods | Metro Mining vs. Neurotech International | Metro Mining vs. Flagship Investments | Metro Mining vs. Hotel Property Investments |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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