Correlation Between Newlake Capital and Globex Mining

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

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

Diversification Opportunities for Newlake Capital and Globex Mining

0.59

Correlation Coefficient

Newlake Capital  Globex Mining

Very weak diversification

The 3 months correlation between Newlake and Globex is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Newlake Capital Partners 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 Newlake Capital 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 Newlake Capital Partners 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 Newlake Capital i.e., Newlake Capital and Globex Mining go up and down completely randomly.

Pair Corralation between Newlake Capital and Globex Mining

Given the investment horizon of 90 days Newlake Capital Partners is expected to generate 0.72 times more return on investment than Globex Mining. However, Newlake Capital Partners is 1.39 times less risky than Globex Mining. It trades about 0.1 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.03 per unit of risk. If you would invest  1,128  in Newlake Capital Partners on January 19, 2024 and sell it today you would earn a total of  631.00  from holding Newlake Capital Partners or generate 55.94% return on investment over 90 days.

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

Newlake Capital Partners  vs.  Globex Mining Enterprises

Newlake Capital Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newlake Capital Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Newlake Capital may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Globex Mining Enterprises

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Globex Mining may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Newlake Capital and Globex Mining

The main advantage of trading using opposite Newlake Capital and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newlake Capital 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 Newlake Capital Partners 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.