Correlation Between Caledonia Mining and GlobalData PLC
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and GlobalData PLC 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 Caledonia Mining and GlobalData PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and GlobalData PLC, you can compare the effects of market volatilities on Caledonia Mining and GlobalData PLC 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 Caledonia Mining with a short position of GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and GlobalData PLC.
Diversification Opportunities for Caledonia Mining and GlobalData PLC
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caledonia and GlobalData is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and GlobalData PLC go up and down completely randomly.
Pair Corralation between Caledonia Mining and GlobalData PLC
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the GlobalData PLC. In addition to that, Caledonia Mining is 1.28 times more volatile than GlobalData PLC. It trades about -0.16 of its total potential returns per unit of risk. GlobalData PLC is currently generating about -0.08 per unit of volatility. If you would invest 20,700 in GlobalData PLC on September 26, 2024 and sell it today you would lose (2,150) from holding GlobalData PLC or give up 10.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Caledonia Mining vs. GlobalData PLC
Performance |
Timeline |
Caledonia Mining |
GlobalData PLC |
Caledonia Mining and GlobalData PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caledonia Mining and GlobalData PLC
The main advantage of trading using opposite Caledonia Mining and GlobalData PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, GlobalData PLC 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 GlobalData PLC will offset losses from the drop in GlobalData PLC's long position.Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Ferrexpo PLC | Caledonia Mining vs. Atalaya Mining |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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