Correlation Between Globex Mining and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Globex Mining and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Globex Mining and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Dow Jones.
Diversification Opportunities for Globex Mining and Dow Jones
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globex and Dow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Globex Mining i.e., Globex Mining and Dow Jones go up and down completely randomly.
Pair Corralation between Globex Mining and Dow Jones
Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 3.2 times more return on investment than Dow Jones. However, Globex Mining is 3.2 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 86.00 in Globex Mining Enterprises on August 29, 2024 and sell it today you would earn a total of 22.00 from holding Globex Mining Enterprises or generate 25.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Dow Jones Industrial
Performance |
| Timeline |
Globex Mining and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Globex Mining Enterprises
Pair trading matchups for Globex Mining
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Globex Mining and Dow Jones
The main advantage of trading using opposite Globex Mining and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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