Correlation Between Globex Mining and American Hotel
Can any of the company-specific risk be diversified away by investing in both Globex Mining and American Hotel 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 American Hotel 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 American Hotel Income, you can compare the effects of market volatilities on Globex Mining and American Hotel 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 American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and American Hotel.
Diversification Opportunities for Globex Mining and American Hotel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Globex and American is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income 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 American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Globex Mining i.e., Globex Mining and American Hotel go up and down completely randomly.
Pair Corralation between Globex Mining and American Hotel
Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 0.64 times more return on investment than American Hotel. However, Globex Mining Enterprises is 1.57 times less risky than American Hotel. It trades about 0.19 of its potential returns per unit of risk. American Hotel Income is currently generating about 0.02 per unit of risk. If you would invest 84.00 in Globex Mining Enterprises on September 12, 2024 and sell it today you would earn a total of 28.00 from holding Globex Mining Enterprises or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globex Mining Enterprises vs. American Hotel Income
Performance |
| Timeline |
| Globex Mining Enterprises |
| American Hotel Income |
Globex Mining and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and American Hotel
The main advantage of trading using opposite Globex Mining and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel'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 |
| American Hotel vs. InterRent Real Estate | American Hotel vs. Canadian Apartment Properties | American Hotel vs. Granite Real Estate | American Hotel vs. Crombie Real Estate |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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