Correlation Between Globe Metals and Block
Can any of the company-specific risk be diversified away by investing in both Globe Metals and Block 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 Block 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 Block Inc, you can compare the effects of market volatilities on Globe Metals and Block 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 Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Block.
Diversification Opportunities for Globe Metals and Block
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Globe and Block is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc 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 Block. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Block Inc has no effect on the direction of Globe Metals i.e., Globe Metals and Block go up and down completely randomly.
Pair Corralation between Globe Metals and Block
Assuming the 90 days trading horizon Globe Metals Mining is expected to generate 1.99 times more return on investment than Block. However, Globe Metals is 1.99 times more volatile than Block Inc. It trades about 0.04 of its potential returns per unit of risk. Block Inc is currently generating about 0.06 per unit of risk. If you would invest 3.30 in Globe Metals Mining on September 14, 2024 and sell it today you would earn a total of 0.80 from holding Globe Metals Mining or generate 24.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Metals Mining vs. Block Inc
Performance |
| Timeline |
| Globe Metals Mining |
| Block Inc |
Globe Metals and Block Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Block
The main advantage of trading using opposite Globe Metals and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Block 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 Block will offset losses from the drop in Block's long position.| Globe Metals vs. Northern Star Resources | Globe Metals vs. Evolution Mining | Globe Metals vs. Bluescope Steel | Globe Metals vs. Sandfire Resources NL |
| Block vs. National Storage REIT | Block vs. Hawsons Iron | Block vs. Champion Iron | Block vs. MetalsGrove 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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