Correlation Between Glencore PLC and Europa Metals
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Europa Metals 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 Europa Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC and Europa Metals, you can compare the effects of market volatilities on Glencore PLC and Europa Metals 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 Europa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Europa Metals.
Diversification Opportunities for Glencore PLC and Europa Metals
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Glencore and Europa is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Europa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europa Metals 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 Europa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europa Metals has no effect on the direction of Glencore PLC i.e., Glencore PLC and Europa Metals go up and down completely randomly.
Pair Corralation between Glencore PLC and Europa Metals
Assuming the 90 days trading horizon Glencore PLC is expected to generate 0.1 times more return on investment than Europa Metals. However, Glencore PLC is 9.91 times less risky than Europa Metals. It trades about -0.15 of its potential returns per unit of risk. Europa Metals is currently generating about -0.05 per unit of risk. If you would invest 933,200 in Glencore PLC on August 28, 2024 and sell it today you would lose (59,100) from holding Glencore PLC or give up 6.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore PLC vs. Europa Metals
Performance |
| Timeline |
| Glencore PLC |
| Europa Metals |
Glencore PLC and Europa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Europa Metals
The main advantage of trading using opposite Glencore PLC and Europa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Europa Metals 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 Europa Metals will offset losses from the drop in Europa Metals' long position.| Glencore PLC vs. Life Healthcare | Glencore PLC vs. RCL Foods | Glencore PLC vs. Bytes Technology | Glencore PLC vs. Frontier Transport Holdings |
| Europa Metals vs. Brimstone Investment | Europa Metals vs. Safari Investments RSA | Europa Metals vs. eMedia Holdings Limited | Europa Metals vs. Master Drilling Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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