Correlation Between Glencore Plc and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Glencore Plc and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore plc and iShares Trust , you can compare the effects of market volatilities on Glencore Plc and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore Plc and IShares Trust.
Diversification Opportunities for Glencore Plc and IShares Trust
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Glencore and IShares is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Glencore plc and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Glencore Plc i.e., Glencore Plc and IShares Trust go up and down completely randomly.
Pair Corralation between Glencore Plc and IShares Trust
Assuming the 90 days trading horizon Glencore Plc is expected to generate 14.82 times less return on investment than IShares Trust. But when comparing it to its historical volatility, Glencore plc is 11.87 times less risky than IShares Trust. It trades about 0.1 of its potential returns per unit of risk. iShares Trust is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 169,463 in iShares Trust on August 29, 2024 and sell it today you would earn a total of 76,945 from holding iShares Trust or generate 45.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore plc vs. iShares Trust
Performance |
| Timeline |
| Glencore plc |
| iShares Trust |
Glencore Plc and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore Plc and IShares Trust
The main advantage of trading using opposite Glencore Plc and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore Plc position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Glencore Plc vs. First Republic Bank | Glencore Plc vs. Micron Technology | Glencore Plc vs. Taiwan Semiconductor Manufacturing | Glencore Plc vs. Verizon Communications |
| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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