Correlation Between Glencore PLC and Centor Energy
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Centor Energy 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 Centor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC ADR and Centor Energy, you can compare the effects of market volatilities on Glencore PLC and Centor Energy 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 Centor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Centor Energy.
Diversification Opportunities for Glencore PLC and Centor Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Glencore and Centor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Centor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centor Energy 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 ADR are associated (or correlated) with Centor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centor Energy has no effect on the direction of Glencore PLC i.e., Glencore PLC and Centor Energy go up and down completely randomly.
Pair Corralation between Glencore PLC and Centor Energy
Assuming the 90 days horizon Glencore PLC ADR is expected to generate 0.38 times more return on investment than Centor Energy. However, Glencore PLC ADR is 2.63 times less risky than Centor Energy. It trades about 0.0 of its potential returns per unit of risk. Centor Energy is currently generating about -0.05 per unit of risk. If you would invest 1,036 in Glencore PLC ADR on August 29, 2024 and sell it today you would lose (85.00) from holding Glencore PLC ADR or give up 8.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore PLC ADR vs. Centor Energy
Performance |
| Timeline |
| Glencore PLC ADR |
| Centor Energy |
Glencore PLC and Centor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Centor Energy
The main advantage of trading using opposite Glencore PLC and Centor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Centor Energy 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 Centor Energy will offset losses from the drop in Centor Energy's long position.The idea behind Glencore PLC ADR and Centor Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Centor Energy vs. Vale SA ADR | Centor Energy vs. BHP Group Limited | Centor Energy vs. Glencore PLC ADR | Centor Energy vs. Piedmont Lithium Ltd |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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