Correlation Between Major Drilling and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Glencore PLC 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 Major Drilling and Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Glencore PLC, you can compare the effects of market volatilities on Major Drilling and Glencore PLC 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 Major Drilling with a short position of Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Glencore PLC.
Diversification Opportunities for Major Drilling and Glencore PLC
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Major and Glencore is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and Major Drilling 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 Major Drilling Group are associated (or correlated) with Glencore PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore PLC has no effect on the direction of Major Drilling i.e., Major Drilling and Glencore PLC go up and down completely randomly.
Pair Corralation between Major Drilling and Glencore PLC
Assuming the 90 days horizon Major Drilling Group is expected to generate 1.13 times more return on investment than Glencore PLC. However, Major Drilling is 1.13 times more volatile than Glencore PLC. It trades about 0.06 of its potential returns per unit of risk. Glencore PLC is currently generating about -0.12 per unit of risk. If you would invest 535.00 in Major Drilling Group on September 3, 2024 and sell it today you would earn a total of 15.00 from holding Major Drilling Group or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Glencore PLC
Performance |
| Timeline |
| Major Drilling Group |
| Glencore PLC |
Major Drilling and Glencore PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Glencore PLC
The main advantage of trading using opposite Major Drilling and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Glencore PLC 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 Glencore PLC will offset losses from the drop in Glencore PLC's long position.| Major Drilling vs. Commercial Vehicle Group | Major Drilling vs. Citic Telecom International | Major Drilling vs. Hemisphere Energy Corp | Major Drilling vs. Spirent Communications plc |
| Glencore PLC vs. Merit Medical Systems | Glencore PLC vs. SOUTHWEST AIRLINES | Glencore PLC vs. American Airlines Group | Glencore PLC vs. Scandinavian Tobacco Group |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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