Correlation Between HomeChoice Investments and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both HomeChoice Investments 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 HomeChoice Investments and Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeChoice Investments and Glencore PLC, you can compare the effects of market volatilities on HomeChoice Investments 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 HomeChoice Investments with a short position of Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeChoice Investments and Glencore PLC.
Diversification Opportunities for HomeChoice Investments and Glencore PLC
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HomeChoice and Glencore is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding HomeChoice Investments and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and HomeChoice Investments 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 HomeChoice Investments 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 has no effect on the direction of HomeChoice Investments i.e., HomeChoice Investments and Glencore PLC go up and down completely randomly.
Pair Corralation between HomeChoice Investments and Glencore PLC
Assuming the 90 days trading horizon HomeChoice Investments is expected to under-perform the Glencore PLC. In addition to that, HomeChoice Investments is 2.62 times more volatile than Glencore PLC. It trades about -0.2 of its total potential returns per unit of risk. Glencore PLC is currently generating about -0.24 per unit of volatility. If you would invest 948,700 in Glencore PLC on August 31, 2024 and sell it today you would lose (87,700) from holding Glencore PLC or give up 9.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeChoice Investments vs. Glencore PLC
Performance |
| Timeline |
| HomeChoice Investments |
| Glencore PLC |
HomeChoice Investments and Glencore PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeChoice Investments and Glencore PLC
The main advantage of trading using opposite HomeChoice Investments and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeChoice Investments 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.| HomeChoice Investments vs. British American Tobacco | HomeChoice Investments vs. E Media Holdings | HomeChoice Investments vs. We Buy Cars | HomeChoice Investments vs. eMedia Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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