Correlation Between IGO and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both IGO 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 IGO and Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Glencore PLC ADR, you can compare the effects of market volatilities on IGO 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 IGO with a short position of Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Glencore PLC.
Diversification Opportunities for IGO and Glencore PLC
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IGO and Glencore is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited 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 IGO 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 IGO Limited 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 IGO i.e., IGO and Glencore PLC go up and down completely randomly.
Pair Corralation between IGO and Glencore PLC
Assuming the 90 days horizon IGO Limited is expected to under-perform the Glencore PLC. In addition to that, IGO is 1.83 times more volatile than Glencore PLC ADR. It trades about -0.05 of its total potential returns per unit of risk. Glencore PLC ADR is currently generating about 0.0 per unit of volatility. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. Glencore PLC ADR
Performance |
| Timeline |
| IGO Limited |
| Glencore PLC ADR |
IGO and Glencore PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Glencore PLC
The main advantage of trading using opposite IGO and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO 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.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Glencore PLC vs. Anglo American PLC | Glencore PLC vs. Sumitomo Metal Mining | Glencore PLC vs. Rio Tinto Group | Glencore PLC vs. Ivanhoe Mines |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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