Correlation Between Globex Mining and Rogers Communications

Can any of the company-specific risk be diversified away by investing in both Globex Mining and Rogers Communications 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 Globex Mining and Rogers Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Globex Mining and Rogers Communications

-0.75

Correlation Coefficient

Globex Mining  Rogers Communications

Pay attention - limited upside

The 3 months correlation between Globex and Rogers is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications and Globex 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 Globex Mining Enterprises are associated (or correlated) with Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Globex Mining i.e., Globex Mining and Rogers Communications go up and down completely randomly.

Pair Corralation between Globex Mining and Rogers Communications

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 1.5 times more return on investment than Rogers Communications. However, Globex Mining is 1.5 times more volatile than Rogers Communications. It trades about 0.13 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.08 per unit of risk. If you would invest  118.00  in Globex Mining Enterprises on December 30, 2024 and sell it today you would earn a total of  28.00  from holding Globex Mining Enterprises or generate 23.73% return on investment over 90 days.

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

Globex Mining Enterprises  vs.  Rogers Communications

Globex Mining Enterprises

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Globex Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Rogers Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Globex Mining and Rogers Communications

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

The idea behind Globex Mining Enterprises and Rogers Communications 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.