Correlation Between Glencore PLC and Lithium Corp
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Lithium Corp 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 Lithium Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC and Lithium Corp, you can compare the effects of market volatilities on Glencore PLC and Lithium Corp 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 Lithium Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Lithium Corp.
Diversification Opportunities for Glencore PLC and Lithium Corp
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Glencore and Lithium is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Corp 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 Lithium Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Corp has no effect on the direction of Glencore PLC i.e., Glencore PLC and Lithium Corp go up and down completely randomly.
Pair Corralation between Glencore PLC and Lithium Corp
Assuming the 90 days horizon Glencore PLC is expected to generate 0.31 times more return on investment than Lithium Corp. However, Glencore PLC is 3.22 times less risky than Lithium Corp. It trades about -0.16 of its potential returns per unit of risk. Lithium Corp is currently generating about -0.08 per unit of risk. If you would invest 525.00 in Glencore PLC on September 1, 2024 and sell it today you would lose (42.00) from holding Glencore PLC or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore PLC vs. Lithium Corp
Performance |
| Timeline |
| Glencore PLC |
| Lithium Corp |
Glencore PLC and Lithium Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Lithium Corp
The main advantage of trading using opposite Glencore PLC and Lithium Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Lithium Corp 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 Lithium Corp will offset losses from the drop in Lithium Corp'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 |
| Lithium Corp vs. Altura Mining Limited | Lithium Corp vs. Frontier Lithium | Lithium Corp vs. Savannah Resources Plc | Lithium Corp vs. Lithium Ionic Corp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |