Correlation Between Glencore PLC and Filo Mining
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Filo Mining 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 Filo Mining 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 Filo Mining Corp, you can compare the effects of market volatilities on Glencore PLC and Filo Mining 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 Filo Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Filo Mining.
Diversification Opportunities for Glencore PLC and Filo Mining
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Glencore and Filo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Filo Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filo Mining Corp 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 Filo Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filo Mining Corp has no effect on the direction of Glencore PLC i.e., Glencore PLC and Filo Mining go up and down completely randomly.
Pair Corralation between Glencore PLC and Filo Mining
Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the Filo Mining. In addition to that, Glencore PLC is 2.22 times more volatile than Filo Mining Corp. It trades about -0.19 of its total potential returns per unit of risk. Filo Mining Corp is currently generating about -0.11 per unit of volatility. If you would invest 2,346 in Filo Mining Corp on August 29, 2024 and sell it today you would lose (56.00) from holding Filo Mining Corp or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore PLC ADR vs. Filo Mining Corp
Performance |
| Timeline |
| Glencore PLC ADR |
| Filo Mining Corp |
Glencore PLC and Filo Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Filo Mining
The main advantage of trading using opposite Glencore PLC and Filo Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Filo Mining 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 Filo Mining will offset losses from the drop in Filo Mining's long position.The idea behind Glencore PLC ADR and Filo Mining Corp 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.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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