Correlation Between Solitario Exploration and Globex Mining

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

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

Diversification Opportunities for Solitario Exploration and Globex Mining

0.7

Correlation Coefficient

Solitario Exploration  Globex Mining

Poor diversification

The 3 months correlation between Solitario and Globex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Solitario Exploration Royalty and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and Solitario Exploration 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 Solitario Exploration Royalty are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Solitario Exploration i.e., Solitario Exploration and Globex Mining go up and down completely randomly.

Pair Corralation between Solitario Exploration and Globex Mining

Assuming the 90 days trading horizon Solitario Exploration is expected to generate 2.15 times less return on investment than Globex Mining. In addition to that, Solitario Exploration is 1.08 times more volatile than Globex Mining Enterprises. It trades about 0.07 of its total potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.17 per unit of volatility. If you would invest  109.00  in Globex Mining Enterprises on December 1, 2024 and sell it today you would earn a total of  35.00  from holding Globex Mining Enterprises or generate 32.11% return on investment over 90 days.

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

Solitario Exploration Royalty  vs.  Globex Mining Enterprises

Solitario Exploration

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solitario Exploration Royalty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Solitario Exploration displayed solid returns over the last few months and may actually be approaching a breakup point.

Globex Mining Enterprises

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 13 (%) 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.

Pair Trading with Solitario Exploration and Globex Mining

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

The idea behind Solitario Exploration Royalty and Globex Mining Enterprises 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.