Correlation Between Globex Mining and Air Canada
Can any of the company-specific risk be diversified away by investing in both Globex Mining and Air Canada 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 Globex Mining and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and Air Canada, you can compare the effects of market volatilities on Globex Mining and Air Canada 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 Globex Mining with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Air Canada.
Diversification Opportunities for Globex Mining and Air Canada
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globex and Air is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Globex Mining i.e., Globex Mining and Air Canada go up and down completely randomly.
Pair Corralation between Globex Mining and Air Canada
Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 1.3 times more return on investment than Air Canada. However, Globex Mining is 1.3 times more volatile than Air Canada. It trades about 0.04 of its potential returns per unit of risk. Air Canada is currently generating about 0.01 per unit of risk. If you would invest 85.00 in Globex Mining Enterprises on September 12, 2024 and sell it today you would earn a total of 27.00 from holding Globex Mining Enterprises or generate 31.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Air Canada
Performance |
| Timeline |
| Globex Mining Enterprises |
| Air Canada |
Globex Mining and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and Air Canada
The main advantage of trading using opposite Globex Mining and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Globex Mining vs. Ressources Minieres Radisson | Globex Mining vs. Galantas Gold Corp | Globex Mining vs. Red Pine Exploration | Globex Mining vs. Kore 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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