Correlation Between NextSource Materials and Globex Mining
Can any of the company-specific risk be diversified away by investing in both NextSource Materials 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 NextSource Materials and Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Globex Mining Enterprises, you can compare the effects of market volatilities on NextSource Materials 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 NextSource Materials with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Globex Mining.
Diversification Opportunities for NextSource Materials and Globex Mining
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NextSource and Globex is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials 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 NextSource Materials 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 NextSource Materials 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 NextSource Materials i.e., NextSource Materials and Globex Mining go up and down completely randomly.
Pair Corralation between NextSource Materials and Globex Mining
Assuming the 90 days trading horizon NextSource Materials is expected to under-perform the Globex Mining. In addition to that, NextSource Materials is 1.71 times more volatile than Globex Mining Enterprises. It trades about -0.04 of its total potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.04 per unit of volatility. If you would invest 91.00 in Globex Mining Enterprises on October 12, 2024 and sell it today you would earn a total of 42.00 from holding Globex Mining Enterprises or generate 46.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextSource Materials vs. Globex Mining Enterprises
Performance |
| Timeline |
| NextSource Materials |
| Globex Mining Enterprises |
NextSource Materials and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextSource Materials and Globex Mining
The main advantage of trading using opposite NextSource Materials and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials 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.| NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Northern Graphite | NextSource Materials vs. Lomiko Metals | NextSource Materials vs. Elcora Advanced Materials |
| Globex Mining vs. Chibougamau Independent Mines | Globex Mining vs. Entree Resources | Globex Mining vs. Solitario Exploration Royalty | Globex Mining vs. Forsys 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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