Correlation Between Glencore PLC and Snow Lake
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Snow Lake 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 Snow Lake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC and Snow Lake Resources, you can compare the effects of market volatilities on Glencore PLC and Snow Lake 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 Snow Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Snow Lake.
Diversification Opportunities for Glencore PLC and Snow Lake
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Glencore and Snow is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Snow Lake Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Lake 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 Snow Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Lake Resources has no effect on the direction of Glencore PLC i.e., Glencore PLC and Snow Lake go up and down completely randomly.
Pair Corralation between Glencore PLC and Snow Lake
Assuming the 90 days horizon Glencore PLC is expected to generate 0.31 times more return on investment than Snow Lake. However, Glencore PLC is 3.19 times less risky than Snow Lake. It trades about -0.01 of its potential returns per unit of risk. Snow Lake Resources is currently generating about -0.04 per unit of risk. If you would invest 588.00 in Glencore PLC on August 30, 2024 and sell it today you would lose (110.00) from holding Glencore PLC or give up 18.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Glencore PLC vs. Snow Lake Resources
Performance |
| Timeline |
| Glencore PLC |
| Snow Lake Resources |
Glencore PLC and Snow Lake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Snow Lake
The main advantage of trading using opposite Glencore PLC and Snow Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Snow Lake 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 Snow Lake will offset losses from the drop in Snow Lake's long position.| Glencore PLC vs. Anglo American PLC | Glencore PLC vs. Teck Resources Ltd | Glencore PLC vs. BHP Group Limited | Glencore PLC vs. Vale SA ADR |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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