Correlation Between Glencore PLC and South32 ADR
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and South32 ADR 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 South32 ADR 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 South32 ADR, you can compare the effects of market volatilities on Glencore PLC and South32 ADR 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 South32 ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and South32 ADR.
Diversification Opportunities for Glencore PLC and South32 ADR
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Glencore and South32 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and South32 ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 ADR 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 South32 ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 ADR has no effect on the direction of Glencore PLC i.e., Glencore PLC and South32 ADR go up and down completely randomly.
Pair Corralation between Glencore PLC and South32 ADR
Assuming the 90 days horizon Glencore PLC ADR is expected to generate 0.87 times more return on investment than South32 ADR. However, Glencore PLC ADR is 1.14 times less risky than South32 ADR. It trades about 0.0 of its potential returns per unit of risk. South32 ADR is currently generating about 0.0 per unit of risk. If you would invest 1,005 in Glencore PLC ADR on August 26, 2024 and sell it today you would lose (42.00) from holding Glencore PLC ADR or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore PLC ADR vs. South32 ADR
Performance |
| Timeline |
| Glencore PLC ADR |
| South32 ADR |
Glencore PLC and South32 ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and South32 ADR
The main advantage of trading using opposite Glencore PLC and South32 ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, South32 ADR 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 South32 ADR will offset losses from the drop in South32 ADR's long position.| Glencore PLC vs. Anglo American PLC | Glencore PLC vs. Sumitomo Metal Mining | Glencore PLC vs. Rio Tinto Group | Glencore PLC vs. Ivanhoe Mines |
| South32 ADR vs. Liontown Resources Limited | South32 ADR vs. IGO Limited | South32 ADR vs. Anglo American PLC | South32 ADR vs. IGO Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |