Correlation Between Glencore PLC and We Buy
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and We Buy 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 We Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC and We Buy Cars, you can compare the effects of market volatilities on Glencore PLC and We Buy 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 We Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and We Buy.
Diversification Opportunities for Glencore PLC and We Buy
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Glencore and WBC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and We Buy Cars in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on We Buy Cars 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 We Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of We Buy Cars has no effect on the direction of Glencore PLC i.e., Glencore PLC and We Buy go up and down completely randomly.
Pair Corralation between Glencore PLC and We Buy
Assuming the 90 days trading horizon Glencore PLC is expected to under-perform the We Buy. But the stock apears to be less risky and, when comparing its historical volatility, Glencore PLC is 1.18 times less risky than We Buy. The stock trades about -0.04 of its potential returns per unit of risk. The We Buy Cars is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 204,000 in We Buy Cars on August 27, 2024 and sell it today you would earn a total of 215,600 from holding We Buy Cars or generate 105.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 64.49% |
| Values | Daily Returns |
Glencore PLC vs. We Buy Cars
Performance |
| Timeline |
| Glencore PLC |
| We Buy Cars |
Glencore PLC and We Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and We Buy
The main advantage of trading using opposite Glencore PLC and We Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, We Buy 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 We Buy will offset losses from the drop in We Buy's long position.| Glencore PLC vs. Safari Investments RSA | Glencore PLC vs. African Media Entertainment | Glencore PLC vs. eMedia Holdings Limited | Glencore PLC vs. Frontier Transport Holdings |
| We Buy vs. eMedia Holdings Limited | We Buy vs. Deneb Investments | We Buy vs. Hosken Consolidated Investments | We Buy vs. Astoria Investments |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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