Correlation Between Globe Metals and Macquarie Group

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

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

Diversification Opportunities for Globe Metals and Macquarie Group

0.14

Correlation Coefficient

Globe Metals  Macquarie Group

Average diversification

The 3 months correlation between Globe and Macquarie is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Globe Metals 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 Globe Metals Mining are associated (or correlated) with Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Globe Metals i.e., Globe Metals and Macquarie Group go up and down completely randomly.

Pair Corralation between Globe Metals and Macquarie Group

Assuming the 90 days trading horizon Globe Metals Mining is expected to generate 14.66 times more return on investment than Macquarie Group. However, Globe Metals is 14.66 times more volatile than Macquarie Group Ltd. It trades about 0.03 of its potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.06 per unit of risk. If you would invest  3.80  in Globe Metals Mining on September 26, 2024 and sell it today you would earn a total of  0.20  from holding Globe Metals Mining or generate 5.26% return on investment over 90 days.

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

Globe Metals Mining  vs.  Macquarie Group Ltd

Globe Metals Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Metals Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Globe Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Macquarie Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Macquarie Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Globe Metals and Macquarie Group

The main advantage of trading using opposite Globe Metals and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.

The idea behind Globe Metals Mining and Macquarie Group Ltd 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.