Correlation Between Metro Mining and Globe Metals
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Globe Metals 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 Metro Mining and Globe Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Globe Metals Mining, you can compare the effects of market volatilities on Metro Mining and Globe Metals 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 Metro Mining with a short position of Globe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Globe Metals.
Diversification Opportunities for Metro Mining and Globe Metals
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metro and Globe is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Globe Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Metals Mining and Metro 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 Metro Mining are associated (or correlated) with Globe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Metals Mining has no effect on the direction of Metro Mining i.e., Metro Mining and Globe Metals go up and down completely randomly.
Pair Corralation between Metro Mining and Globe Metals
Assuming the 90 days trading horizon Metro Mining is expected to generate 0.81 times more return on investment than Globe Metals. However, Metro Mining is 1.24 times less risky than Globe Metals. It trades about 0.1 of its potential returns per unit of risk. Globe Metals Mining is currently generating about 0.04 per unit of risk. If you would invest 2.10 in Metro Mining on September 14, 2024 and sell it today you would earn a total of 3.60 from holding Metro Mining or generate 171.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Metro Mining vs. Globe Metals Mining
Performance |
| Timeline |
| Metro Mining |
| Globe Metals Mining |
Metro Mining and Globe Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Globe Metals
The main advantage of trading using opposite Metro Mining and Globe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Globe Metals 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 Globe Metals will offset losses from the drop in Globe Metals' long position.| Metro Mining vs. Super Retail Group | Metro Mining vs. Alternative Investment Trust | Metro Mining vs. Carlton Investments | Metro Mining vs. Diversified United Investment |
| Globe Metals vs. Northern Star Resources | Globe Metals vs. Evolution Mining | Globe Metals vs. Bluescope Steel | Globe Metals vs. Sandfire Resources NL |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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