Correlation Between XLMedia PLC and Glencore Plc
Can any of the company-specific risk be diversified away by investing in both XLMedia PLC 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 XLMedia PLC and Glencore Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and Glencore plc, you can compare the effects of market volatilities on XLMedia PLC 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 XLMedia PLC with a short position of Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Glencore Plc.
Diversification Opportunities for XLMedia PLC and Glencore Plc
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between XLMedia and Glencore is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC i.e., XLMedia PLC and Glencore Plc go up and down completely randomly.
Pair Corralation between XLMedia PLC and Glencore Plc
Assuming the 90 days horizon XLMedia PLC is expected to generate 2.82 times more return on investment than Glencore Plc. However, XLMedia PLC is 2.82 times more volatile than Glencore plc. It trades about 0.02 of its potential returns per unit of risk. Glencore plc is currently generating about -0.01 per unit of risk. If you would invest 18.00 in XLMedia PLC on September 2, 2024 and sell it today you would lose (4.00) from holding XLMedia PLC or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XLMedia PLC vs. Glencore plc
Performance |
| Timeline |
| XLMedia PLC |
| Glencore plc |
XLMedia PLC and Glencore Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XLMedia PLC and Glencore Plc
The main advantage of trading using opposite XLMedia PLC and Glencore Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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.The idea behind XLMedia PLC and Glencore plc 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.| Glencore Plc vs. PLAYSTUDIOS A DL 0001 | Glencore Plc vs. ADRIATIC METALS LS 013355 | Glencore Plc vs. GREENX METALS LTD | Glencore Plc vs. Universal Display |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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