Correlation Between Pioneer Credit and Globe Metals

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

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

Diversification Opportunities for Pioneer Credit and Globe Metals

0.25

Correlation Coefficient

Pioneer Credit  Globe Metals

Modest diversification

The 3 months correlation between Pioneer and Globe is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Credit 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 Pioneer Credit 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 Pioneer Credit 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 Pioneer Credit i.e., Pioneer Credit and Globe Metals go up and down completely randomly.

Pair Corralation between Pioneer Credit and Globe Metals

Assuming the 90 days trading horizon Pioneer Credit is expected to generate 0.56 times more return on investment than Globe Metals. However, Pioneer Credit is 1.78 times less risky than Globe Metals. It trades about 0.01 of its potential returns per unit of risk. Globe Metals Mining is currently generating about -0.01 per unit of risk. If you would invest  56.00  in Pioneer Credit on October 10, 2024 and sell it today you would lose (1.00) from holding Pioneer Credit or give up 1.79% of portfolio value over 90 days.

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

Pioneer Credit  vs.  Globe Metals Mining

Pioneer Credit

Risk-Adjusted Performance

3 of 100

Insignificant

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

Globe Metals Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Metals Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Globe Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pioneer Credit and Globe Metals

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

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