Correlation Between Cleveland Cliffs and Glencore Plc
Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs 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 Cleveland Cliffs and Glencore Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleveland Cliffs and Glencore plc, you can compare the effects of market volatilities on Cleveland Cliffs 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 Cleveland Cliffs with a short position of Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Glencore Plc.
Diversification Opportunities for Cleveland Cliffs and Glencore Plc
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cleveland and Glencore is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc and Cleveland Cliffs 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 Cleveland Cliffs 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 Cleveland Cliffs i.e., Cleveland Cliffs and Glencore Plc go up and down completely randomly.
Pair Corralation between Cleveland Cliffs and Glencore Plc
Assuming the 90 days trading horizon Cleveland Cliffs is expected to generate 1.91 times more return on investment than Glencore Plc. However, Cleveland Cliffs is 1.91 times more volatile than Glencore plc. It trades about -0.03 of its potential returns per unit of risk. Glencore plc is currently generating about -0.06 per unit of risk. If you would invest 34,772 in Cleveland Cliffs on August 25, 2024 and sell it today you would lose (9,272) from holding Cleveland Cliffs or give up 26.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Cleveland Cliffs vs. Glencore plc
Performance |
| Timeline |
| Cleveland Cliffs |
| Glencore plc |
Cleveland Cliffs and Glencore Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cleveland Cliffs and Glencore Plc
The main advantage of trading using opposite Cleveland Cliffs and Glencore Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs 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.| Cleveland Cliffs vs. Rio Tinto Group | Cleveland Cliffs vs. Vale SA | Cleveland Cliffs vs. Glencore plc | Cleveland Cliffs vs. Minera Frisco SAB |
| Glencore Plc vs. Rio Tinto Group | Glencore Plc vs. Vale SA | Glencore Plc vs. Cleveland Cliffs | Glencore Plc vs. Minera Frisco SAB |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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