Correlation Between Labrador Iron and Globex Mining

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

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

Diversification Opportunities for Labrador Iron and Globex Mining

-0.01

Correlation Coefficient

Labrador Iron  Globex Mining

Good diversification

The 3 months correlation between Labrador and Globex is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore 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 Labrador Iron 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 Labrador Iron Ore 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 Labrador Iron i.e., Labrador Iron and Globex Mining go up and down completely randomly.

Pair Corralation between Labrador Iron and Globex Mining

Assuming the 90 days trading horizon Labrador Iron Ore is expected to under-perform the Globex Mining. But the stock apears to be less risky and, when comparing its historical volatility, Labrador Iron Ore is 2.6 times less risky than Globex Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Globex Mining Enterprises is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Globex Mining Enterprises on April 25, 2025 and sell it today you would earn a total of  12.00  from holding Globex Mining Enterprises or generate 9.45% return on investment over 90 days.

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

Labrador Iron Ore  vs.  Globex Mining Enterprises

Labrador Iron Ore

Risk-Adjusted Performance

Very Weak

Over the last 90 days Labrador Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Labrador Iron is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Globex Mining Enterprises

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Globex Mining may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Labrador Iron and Globex Mining

The main advantage of trading using opposite Labrador Iron and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron 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 Labrador Iron Ore 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.