Correlation Between Glencore PLC and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Lynas Rare 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 Lynas Rare 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 Lynas Rare Earths, you can compare the effects of market volatilities on Glencore PLC and Lynas Rare 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 Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Lynas Rare.
Diversification Opportunities for Glencore PLC and Lynas Rare
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Glencore and Lynas is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths 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 Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of Glencore PLC i.e., Glencore PLC and Lynas Rare go up and down completely randomly.
Pair Corralation between Glencore PLC and Lynas Rare
Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the Lynas Rare. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC ADR is 1.22 times less risky than Lynas Rare. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Lynas Rare Earths is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 445.00 in Lynas Rare Earths on August 29, 2024 and sell it today you would lose (4.00) from holding Lynas Rare Earths or give up 0.9% 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. Lynas Rare Earths
Performance |
| Timeline |
| Glencore PLC ADR |
| Lynas Rare Earths |
Glencore PLC and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Lynas Rare
The main advantage of trading using opposite Glencore PLC and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare'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 |
| Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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