Correlation Between CME and De Grey
Can any of the company-specific risk be diversified away by investing in both CME and De Grey 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 CME and De Grey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CME Group and De Grey Mining, you can compare the effects of market volatilities on CME and De Grey 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 CME with a short position of De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of CME and De Grey.
Diversification Opportunities for CME and De Grey
Poor diversification
The 3 months correlation between CME and DGD is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CME Group and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining and CME 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 CME Group are associated (or correlated) with De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of CME i.e., CME and De Grey go up and down completely randomly.
Pair Corralation between CME and De Grey
Assuming the 90 days trading horizon CME Group is expected to under-perform the De Grey. But the stock apears to be less risky and, when comparing its historical volatility, CME Group is 1.31 times less risky than De Grey. The stock trades about -0.01 of its potential returns per unit of risk. The De Grey Mining is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 104.00 in De Grey Mining on October 24, 2024 and sell it today you would earn a total of 15.00 from holding De Grey Mining or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CME Group vs. De Grey Mining
Performance |
| Timeline |
| CME Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| De Grey Mining |
CME and De Grey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CME and De Grey
The main advantage of trading using opposite CME and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CME position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.| CME vs. COMBA TELECOM SYST | CME vs. Singapore Telecommunications Limited | CME vs. LANDSEA GREEN MANAGEMENT | CME vs. Charter Communications |
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 CEOs Directory module to screen CEOs from public companies around the world.
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