Correlation Between Glencore PLC and Largo Resources
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Largo Resources 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 Largo Resources 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 Largo Resources, you can compare the effects of market volatilities on Glencore PLC and Largo Resources 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 Largo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Largo Resources.
Diversification Opportunities for Glencore PLC and Largo Resources
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Glencore and Largo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Largo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largo Resources 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 Largo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largo Resources has no effect on the direction of Glencore PLC i.e., Glencore PLC and Largo Resources go up and down completely randomly.
Pair Corralation between Glencore PLC and Largo Resources
Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the Largo Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC ADR is 2.07 times less risky than Largo Resources. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Largo Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 197.00 in Largo Resources on August 29, 2024 and sell it today you would earn a total of 13.00 from holding Largo Resources or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore PLC ADR vs. Largo Resources
Performance |
| Timeline |
| Glencore PLC ADR |
| Largo Resources |
Glencore PLC and Largo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Largo Resources
The main advantage of trading using opposite Glencore PLC and Largo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Largo Resources 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 Largo Resources will offset losses from the drop in Largo Resources' long position.| Glencore PLC vs. Rockridge Resources | Glencore PLC vs. Ameriwest Lithium | Glencore PLC vs. Osisko Metals Incorporated | Glencore PLC vs. Volt Lithium Corp |
| Largo Resources vs. Skeena Resources | Largo Resources vs. Materion | Largo Resources vs. Compass Minerals International | Largo Resources vs. IperionX Limited American |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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