Correlation Between Glencore PLC and ATT
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and ATT 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 ATT 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 ATT Inc, you can compare the effects of market volatilities on Glencore PLC and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and ATT.
Diversification Opportunities for Glencore PLC and ATT
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Glencore and ATT is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Glencore PLC i.e., Glencore PLC and ATT go up and down completely randomly.
Pair Corralation between Glencore PLC and ATT
Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the ATT. In addition to that, Glencore PLC is 1.61 times more volatile than ATT Inc. It trades about -0.08 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.18 per unit of volatility. If you would invest 1,752 in ATT Inc on September 1, 2024 and sell it today you would earn a total of 564.00 from holding ATT Inc or generate 32.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore PLC ADR vs. ATT Inc
Performance |
| Timeline |
| Glencore PLC ADR |
| ATT Inc |
Glencore PLC and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and ATT
The main advantage of trading using opposite Glencore PLC and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Glencore PLC vs. ATT Inc | Glencore PLC vs. Merck Company | Glencore PLC vs. Walt Disney | Glencore PLC vs. Caterpillar |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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