Correlation Between WM Technology and Globex Mining
Can any of the company-specific risk be diversified away by investing in both WM Technology and Globex Mining 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 WM Technology and Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WM Technology and Globex Mining Enterprises, you can compare the effects of market volatilities on WM Technology and Globex Mining 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 WM Technology with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of WM Technology and Globex Mining.
Diversification Opportunities for WM Technology and Globex Mining
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MAPSW and Globex is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and WM Technology 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 WM Technology are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of WM Technology i.e., WM Technology and Globex Mining go up and down completely randomly.
Pair Corralation between WM Technology and Globex Mining
Assuming the 90 days horizon WM Technology is expected to generate 6.05 times more return on investment than Globex Mining. However, WM Technology is 6.05 times more volatile than Globex Mining Enterprises. It trades about 0.06 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.04 per unit of risk. If you would invest 19.00 in WM Technology on August 26, 2024 and sell it today you would lose (15.11) from holding WM Technology or give up 79.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.77% |
| Values | Daily Returns |
WM Technology vs. Globex Mining Enterprises
Performance |
| Timeline |
| WM Technology |
| Globex Mining Enterprises |
WM Technology and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WM Technology and Globex Mining
The main advantage of trading using opposite WM Technology and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WM Technology position performs unexpectedly, Globex Mining 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 Globex Mining will offset losses from the drop in Globex Mining's long position.The idea behind WM Technology and Globex Mining Enterprises pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Globex Mining vs. Ascendant Resources | Globex Mining vs. Cantex Mine Development | Globex Mining vs. Amarc Resources | Globex Mining vs. Sterling Metals 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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