Correlation Between Teck Resources and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both Teck Resources 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 Teck Resources and Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teck Resources Ltd and Glencore PLC, you can compare the effects of market volatilities on Teck Resources 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 Teck Resources with a short position of Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teck Resources and Glencore PLC.
Diversification Opportunities for Teck Resources and Glencore PLC
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teck and Glencore is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Teck Resources Ltd and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and Teck Resources 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 Teck Resources Ltd 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 Teck Resources i.e., Teck Resources and Glencore PLC go up and down completely randomly.
Pair Corralation between Teck Resources and Glencore PLC
Given the investment horizon of 90 days Teck Resources Ltd is expected to generate 0.95 times more return on investment than Glencore PLC. However, Teck Resources Ltd is 1.05 times less risky than Glencore PLC. It trades about 0.02 of its potential returns per unit of risk. Glencore PLC is currently generating about -0.16 per unit of risk. If you would invest 4,649 in Teck Resources Ltd on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Teck Resources Ltd or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teck Resources Ltd vs. Glencore PLC
Performance |
| Timeline |
| Teck Resources |
| Glencore PLC |
Teck Resources and Glencore PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teck Resources and Glencore PLC
The main advantage of trading using opposite Teck Resources and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teck Resources 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.| Teck Resources vs. Rio Tinto ADR | Teck Resources vs. Vale SA ADR | Teck Resources vs. MP Materials Corp | Teck Resources vs. Lithium Americas Corp |
| Glencore PLC vs. Anglo American PLC | Glencore PLC vs. Teck Resources Ltd | Glencore PLC vs. BHP Group Limited | Glencore PLC vs. Vale SA ADR |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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