Correlation Between Globex Mining and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Globex Mining and Canadian Utilities 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 Canadian Utilities 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 Canadian Utilities Ltd, you can compare the effects of market volatilities on Globex Mining and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Canadian Utilities.
Diversification Opportunities for Globex Mining and Canadian Utilities
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globex and Canadian is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Globex Mining i.e., Globex Mining and Canadian Utilities go up and down completely randomly.
Pair Corralation between Globex Mining and Canadian Utilities
Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 2.68 times more return on investment than Canadian Utilities. However, Globex Mining is 2.68 times more volatile than Canadian Utilities Ltd. It trades about 0.04 of its potential returns per unit of risk. Canadian Utilities Ltd is currently generating about 0.07 per unit of risk. If you would invest 92.00 in Globex Mining Enterprises on September 4, 2024 and sell it today you would earn a total of 17.00 from holding Globex Mining Enterprises or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Canadian Utilities Ltd
Performance |
| Timeline |
| Globex Mining Enterprises |
| Canadian Utilities |
Globex Mining and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and Canadian Utilities
The main advantage of trading using opposite Globex Mining and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| Globex Mining vs. First Majestic Silver | Globex Mining vs. Ivanhoe Energy | Globex Mining vs. Orezone Gold Corp | Globex Mining vs. Faraday Copper Corp |
| Canadian Utilities vs. Canaf Investments | Canadian Utilities vs. Solid Impact Investments | Canadian Utilities vs. Labrador Iron Ore | Canadian Utilities vs. DIRTT Environmental Solutions |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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