Correlation Between Fluor and Glencore Plc
Can any of the company-specific risk be diversified away by investing in both Fluor 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 Fluor and Glencore Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fluor and Glencore plc, you can compare the effects of market volatilities on Fluor 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 Fluor with a short position of Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fluor and Glencore Plc.
Diversification Opportunities for Fluor and Glencore Plc
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fluor and Glencore is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fluor and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc and Fluor 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 Fluor 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 Fluor i.e., Fluor and Glencore Plc go up and down completely randomly.
Pair Corralation between Fluor and Glencore Plc
Assuming the 90 days trading horizon Fluor is expected to generate 25.07 times more return on investment than Glencore Plc. However, Fluor is 25.07 times more volatile than Glencore plc. It trades about 0.07 of its potential returns per unit of risk. Glencore plc is currently generating about 0.1 per unit of risk. If you would invest 65,599 in Fluor on August 29, 2024 and sell it today you would earn a total of 32,928 from holding Fluor or generate 50.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fluor vs. Glencore plc
Performance |
| Timeline |
| Fluor |
| Glencore plc |
Fluor and Glencore Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fluor and Glencore Plc
The main advantage of trading using opposite Fluor and Glencore Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluor 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.| Fluor vs. GMxico Transportes SAB | Fluor vs. Monster Beverage Corp | Fluor vs. DXC Technology | Fluor vs. Grupo Sports World |
| Glencore Plc vs. First Republic Bank | Glencore Plc vs. Micron Technology | Glencore Plc vs. Taiwan Semiconductor Manufacturing | Glencore Plc vs. Verizon Communications |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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