Correlation Between Glencore PLC and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Core Lithium 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 Core Lithium 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 Core Lithium, you can compare the effects of market volatilities on Glencore PLC and Core Lithium 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 Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Core Lithium.
Diversification Opportunities for Glencore PLC and Core Lithium
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Glencore and Core is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium 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 Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Glencore PLC i.e., Glencore PLC and Core Lithium go up and down completely randomly.
Pair Corralation between Glencore PLC and Core Lithium
Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the Core Lithium. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC ADR is 4.37 times less risky than Core Lithium. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Core Lithium is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8.25 in Core Lithium on August 29, 2024 and sell it today you would lose (0.65) from holding Core Lithium or give up 7.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Glencore PLC ADR vs. Core Lithium
Performance |
| Timeline |
| Glencore PLC ADR |
| Core Lithium |
Glencore PLC and Core Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Core Lithium
The main advantage of trading using opposite Glencore PLC and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Core Lithium 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 Core Lithium will offset losses from the drop in Core Lithium's long position.| Glencore PLC vs. Rockridge Resources | Glencore PLC vs. Ameriwest Lithium | Glencore PLC vs. Osisko Metals Incorporated | Glencore PLC vs. Volt Lithium Corp |
| Core Lithium vs. Macmahon Holdings Limited | Core Lithium vs. Prime Meridian Resources | Core Lithium vs. International Lithium Corp | Core Lithium vs. Hudson Resources |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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