Correlation Between Black Rock and Globe Metals

Can any of the company-specific risk be diversified away by investing in both Black Rock 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 Black Rock and Globe Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Black Rock Mining and Globe Metals Mining, you can compare the effects of market volatilities on Black Rock 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 Black Rock with a short position of Globe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Globe Metals.

Diversification Opportunities for Black Rock and Globe Metals

-0.08

Correlation Coefficient

Black Rock  Globe Metals

Good diversification

The 3 months correlation between Black and Globe is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock 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 Black Rock 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 Black Rock 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 Black Rock i.e., Black Rock and Globe Metals go up and down completely randomly.

Pair Corralation between Black Rock and Globe Metals

Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Globe Metals. In addition to that, Black Rock is 1.04 times more volatile than Globe Metals Mining. It trades about -0.14 of its total potential returns per unit of risk. Globe Metals Mining is currently generating about 0.04 per unit of volatility. If you would invest  4.00  in Globe Metals Mining on September 25, 2024 and sell it today you would earn a total of  0.20  from holding Globe Metals Mining or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Black Rock Mining  vs.  Globe Metals Mining

Black Rock Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Rock Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Globe Metals Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Metals Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Globe Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Black Rock and Globe Metals

The main advantage of trading using opposite Black Rock and Globe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock 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.

The idea behind Black Rock Mining and Globe Metals Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.