Correlation Between NYSE Composite and Globex Mining
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Globex Mining Enterprises, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Globex Mining.
Diversification Opportunities for NYSE Composite and Globex Mining
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Globex is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Globex Mining go up and down completely randomly.
Pair Corralation between NYSE Composite and Globex Mining
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.19 times less return on investment than Globex Mining. But when comparing it to its historical volatility, NYSE Composite is 3.63 times less risky than Globex Mining. It trades about 0.11 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Globex Mining Enterprises on August 26, 2024 and sell it today you would earn a total of 16.00 from holding Globex Mining Enterprises or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Globex Mining Enterprises
Performance |
| Timeline |
NYSE Composite and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Globex Mining Enterprises
Pair trading matchups for Globex Mining
Pair Trading with NYSE Composite and Globex Mining
The main advantage of trading using opposite NYSE Composite and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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