Correlation Between Glencore PLC and Hannan Metals
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Hannan 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 Hannan 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 Hannan Metals, you can compare the effects of market volatilities on Glencore PLC and Hannan 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 Hannan Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Hannan Metals.
Diversification Opportunities for Glencore PLC and Hannan Metals
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Glencore and Hannan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Hannan Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannan 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 Hannan Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannan Metals has no effect on the direction of Glencore PLC i.e., Glencore PLC and Hannan Metals go up and down completely randomly.
Pair Corralation between Glencore PLC and Hannan Metals
Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the Hannan Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC ADR is 2.67 times less risky than Hannan Metals. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Hannan Metals is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Hannan Metals on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Hannan Metals or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Glencore PLC ADR vs. Hannan Metals
Performance |
| Timeline |
| Glencore PLC ADR |
| Hannan Metals |
Glencore PLC and Hannan Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Hannan Metals
The main advantage of trading using opposite Glencore PLC and Hannan Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Hannan 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 Hannan Metals will offset losses from the drop in Hannan Metals' long position.| Glencore PLC vs. Rockridge Resources | Glencore PLC vs. Ameriwest Lithium | Glencore PLC vs. Osisko Metals Incorporated | Glencore PLC vs. Volt Lithium Corp |
| Hannan Metals vs. Atco Mining | Hannan Metals vs. Leading Edge Materials | Hannan Metals vs. Arianne Phosphate | Hannan Metals vs. Global Battery Metals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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