Correlation Between GM and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both GM and Glencore PLC 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 GM and Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Glencore PLC ADR, you can compare the effects of market volatilities on GM and Glencore PLC 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 GM with a short position of Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Glencore PLC.
Diversification Opportunities for GM and Glencore PLC
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Glencore is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Glencore PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC ADR and GM 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 General Motors are associated (or correlated) with Glencore PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore PLC ADR has no effect on the direction of GM i.e., GM and Glencore PLC go up and down completely randomly.
Pair Corralation between GM and Glencore PLC
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.2 times more return on investment than Glencore PLC. However, GM is 1.2 times more volatile than Glencore PLC ADR. It trades about 0.13 of its potential returns per unit of risk. Glencore PLC ADR is currently generating about -0.14 per unit of risk. If you would invest 5,154 in General Motors on August 30, 2024 and sell it today you would earn a total of 396.00 from holding General Motors or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Glencore PLC ADR
Performance |
| Timeline |
| General Motors |
| Glencore PLC ADR |
GM and Glencore PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Glencore PLC
The main advantage of trading using opposite GM and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Glencore PLC 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 Glencore PLC will offset losses from the drop in Glencore PLC's long position.The idea behind General Motors and Glencore PLC ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Glencore PLC vs. Rockridge Resources | Glencore PLC vs. Ameriwest Lithium | Glencore PLC vs. Osisko Metals Incorporated | Glencore PLC vs. Volt Lithium Corp |
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.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |