Correlation Between Glencore PLC and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Centaurus 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 Centaurus Metals 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 Centaurus Metals Limited, you can compare the effects of market volatilities on Glencore PLC and Centaurus 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 Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Centaurus Metals.
Diversification Opportunities for Glencore PLC and Centaurus Metals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Glencore and Centaurus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Centaurus Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus 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 ADR are associated (or correlated) with Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of Glencore PLC i.e., Glencore PLC and Centaurus Metals go up and down completely randomly.
Pair Corralation between Glencore PLC and Centaurus Metals
Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the Centaurus Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC ADR is 4.12 times less risky than Centaurus Metals. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Centaurus Metals Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Centaurus Metals Limited on September 1, 2024 and sell it today you would lose (5.00) from holding Centaurus Metals Limited or give up 15.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Glencore PLC ADR vs. Centaurus Metals Limited
Performance |
| Timeline |
| Glencore PLC ADR |
| Centaurus Metals |
Glencore PLC and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Centaurus Metals
The main advantage of trading using opposite Glencore PLC and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Centaurus 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 Centaurus Metals will offset losses from the drop in Centaurus Metals' long position.| Glencore PLC vs. ATT Inc | Glencore PLC vs. Merck Company | Glencore PLC vs. Walt Disney | Glencore PLC vs. Caterpillar |
| Centaurus Metals vs. Edison Cobalt Corp | Centaurus Metals vs. Baroyeca Gold Silver | Centaurus Metals vs. Aurelia Metals Limited | Centaurus Metals vs. China Rare Earth |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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