Correlation Between IShares Trust and Glencore Plc
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Glencore Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Glencore plc, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Glencore Plc.
Diversification Opportunities for IShares Trust and Glencore Plc
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Glencore is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Glencore Plc go up and down completely randomly.
Pair Corralation between IShares Trust and Glencore Plc
Assuming the 90 days trading horizon iShares Trust is expected to generate 11.71 times more return on investment than Glencore Plc. However, IShares Trust is 11.71 times more volatile than Glencore plc. It trades about 0.11 of its potential returns per unit of risk. Glencore plc is currently generating about 0.1 per unit of risk. If you would invest 180,927 in iShares Trust on August 25, 2024 and sell it today you would earn a total of 65,481 from holding iShares Trust or generate 36.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Glencore plc
Performance |
| Timeline |
| iShares Trust |
| Glencore plc |
IShares Trust and Glencore Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Glencore Plc
The main advantage of trading using opposite IShares Trust and Glencore Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Trust |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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