Correlation Between Glencore PLC and Peak Resources
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Peak Resources 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 Glencore PLC and Peak Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC and Peak Resources Limited, you can compare the effects of market volatilities on Glencore PLC and Peak Resources 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 Glencore PLC with a short position of Peak Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Peak Resources.
Diversification Opportunities for Glencore PLC and Peak Resources
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Glencore and Peak is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Peak Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Resources and Glencore 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 Glencore PLC are associated (or correlated) with Peak Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Resources has no effect on the direction of Glencore PLC i.e., Glencore PLC and Peak Resources go up and down completely randomly.
Pair Corralation between Glencore PLC and Peak Resources
Assuming the 90 days horizon Glencore PLC is expected to generate 4.3 times less return on investment than Peak Resources. But when comparing it to its historical volatility, Glencore PLC is 7.24 times less risky than Peak Resources. It trades about 0.1 of its potential returns per unit of risk. Peak Resources Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.10 in Peak Resources Limited on September 13, 2024 and sell it today you would earn a total of 0.15 from holding Peak Resources Limited or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore PLC vs. Peak Resources Limited
Performance |
| Timeline |
| Glencore PLC |
| Peak Resources |
Glencore PLC and Peak Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Peak Resources
The main advantage of trading using opposite Glencore PLC and Peak Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Peak Resources 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 Peak Resources will offset losses from the drop in Peak Resources' long position.| Glencore PLC vs. CHINA TELECOM H | Glencore PLC vs. Food Life Companies | Glencore PLC vs. Charter Communications | Glencore PLC vs. Charoen Pokphand Foods |
| Peak Resources vs. Carsales | Peak Resources vs. SALESFORCE INC CDR | Peak Resources vs. KINGBOARD CHEMICAL | Peak Resources vs. Shin Etsu Chemical Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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