Correlation Between Global Energy and Champion Bear
Can any of the company-specific risk be diversified away by investing in both Global Energy and Champion Bear 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 Global Energy and Champion Bear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Energy Metals and Champion Bear Resources, you can compare the effects of market volatilities on Global Energy and Champion Bear 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 Global Energy with a short position of Champion Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Energy and Champion Bear.
Diversification Opportunities for Global Energy and Champion Bear
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Champion is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Global Energy Metals and Champion Bear Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Bear Resources and Global Energy 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 Global Energy Metals are associated (or correlated) with Champion Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Bear Resources has no effect on the direction of Global Energy i.e., Global Energy and Champion Bear go up and down completely randomly.
Pair Corralation between Global Energy and Champion Bear
Assuming the 90 days horizon Global Energy Metals is expected to generate 1.97 times more return on investment than Champion Bear. However, Global Energy is 1.97 times more volatile than Champion Bear Resources. It trades about 0.13 of its potential returns per unit of risk. Champion Bear Resources is currently generating about -0.21 per unit of risk. If you would invest 1.00 in Global Energy Metals on August 29, 2024 and sell it today you would earn a total of 0.23 from holding Global Energy Metals or generate 23.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global Energy Metals vs. Champion Bear Resources
Performance |
| Timeline |
| Global Energy Metals |
| Champion Bear Resources |
Global Energy and Champion Bear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Energy and Champion Bear
The main advantage of trading using opposite Global Energy and Champion Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Energy position performs unexpectedly, Champion Bear 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 Champion Bear will offset losses from the drop in Champion Bear's long position.| Global Energy vs. Rockridge Resources | Global Energy vs. Ameriwest Lithium | Global Energy vs. Osisko Metals Incorporated | Global Energy vs. Volt Lithium Corp |
| Champion Bear vs. Aurelia Metals Limited | Champion Bear vs. Baroyeca Gold Silver | Champion Bear vs. Centaurus Metals Limited | Champion Bear vs. Edison Cobalt Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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