Correlation Between Power Fi and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Power Fi 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 Power Fi and Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Fi 440 and Globex Mining Enterprises, you can compare the effects of market volatilities on Power Fi 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 Power Fi with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Fi and Globex Mining.
Diversification Opportunities for Power Fi and Globex Mining
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Power and Globex is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Power Fi 440 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 Power Fi 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 Power Fi 440 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 Power Fi i.e., Power Fi and Globex Mining go up and down completely randomly.
Pair Corralation between Power Fi and Globex Mining
Assuming the 90 days trading horizon Power Fi is expected to generate 1.91 times less return on investment than Globex Mining. But when comparing it to its historical volatility, Power Fi 440 is 1.99 times less risky than Globex Mining. It trades about 0.06 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Globex Mining Enterprises on September 15, 2024 and sell it today you would earn a total of 46.00 from holding Globex Mining Enterprises or generate 69.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Fi 440 vs. Globex Mining Enterprises
Performance |
| Timeline |
| Power Fi 440 |
| Globex Mining Enterprises |
Power Fi and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Fi and Globex Mining
The main advantage of trading using opposite Power Fi and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Fi 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.| Power Fi vs. Globex Mining Enterprises | Power Fi vs. Lion One Metals | Power Fi vs. Brookfield Office Properties | Power Fi vs. Forsys Metals Corp |
| Globex Mining vs. Foraco International SA | Globex Mining vs. Geodrill Limited | Globex Mining vs. Major Drilling Group | Globex Mining vs. Bri Chem 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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