Correlation Between Green Technology and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both Green Technology 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 Green Technology and Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Technology Metals and Glencore PLC ADR, you can compare the effects of market volatilities on Green Technology 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 Green Technology with a short position of Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Technology and Glencore PLC.
Diversification Opportunities for Green Technology and Glencore PLC
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Green and Glencore is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology Metals 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 Green Technology 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 Green Technology Metals 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 Green Technology i.e., Green Technology and Glencore PLC go up and down completely randomly.
Pair Corralation between Green Technology and Glencore PLC
Assuming the 90 days horizon Green Technology Metals is expected to under-perform the Glencore PLC. In addition to that, Green Technology is 1.18 times more volatile than Glencore PLC ADR. It trades about -0.36 of its total potential returns per unit of risk. Glencore PLC ADR is currently generating about -0.16 per unit of volatility. If you would invest 1,044 in Glencore PLC ADR on September 1, 2024 and sell it today you would lose (84.00) from holding Glencore PLC ADR or give up 8.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Green Technology Metals vs. Glencore PLC ADR
Performance |
| Timeline |
| Green Technology Metals |
| Glencore PLC ADR |
Green Technology and Glencore PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Technology and Glencore PLC
The main advantage of trading using opposite Green Technology and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Technology 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.| Green Technology vs. Lake Resources NL | Green Technology vs. Arizona Lithium Limited | Green Technology vs. Sayona Mining Limited | Green Technology vs. Argosy Minerals Limited |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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