Correlation Between US GoldMining and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both US GoldMining 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 US GoldMining and Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US GoldMining Warrant and Glencore PLC ADR, you can compare the effects of market volatilities on US GoldMining 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 US GoldMining with a short position of Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of US GoldMining and Glencore PLC.
Diversification Opportunities for US GoldMining and Glencore PLC
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between USGOW and Glencore is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding US GoldMining Warrant 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 US GoldMining 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 US GoldMining Warrant 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 US GoldMining i.e., US GoldMining and Glencore PLC go up and down completely randomly.
Pair Corralation between US GoldMining and Glencore PLC
Assuming the 90 days horizon US GoldMining Warrant is expected to generate 8.51 times more return on investment than Glencore PLC. However, US GoldMining is 8.51 times more volatile than Glencore PLC ADR. It trades about 0.19 of its potential returns per unit of risk. Glencore PLC ADR is currently generating about -0.14 per unit of risk. If you would invest 130.00 in US GoldMining Warrant on August 29, 2024 and sell it today you would earn a total of 75.00 from holding US GoldMining Warrant or generate 57.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
US GoldMining Warrant vs. Glencore PLC ADR
Performance |
| Timeline |
| US GoldMining Warrant |
| Glencore PLC ADR |
US GoldMining and Glencore PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US GoldMining and Glencore PLC
The main advantage of trading using opposite US GoldMining and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US GoldMining 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.| US GoldMining vs. The Gap, | US GoldMining vs. MGIC Investment Corp | US GoldMining vs. Assurant | US GoldMining vs. ICC Holdings |
| Glencore PLC vs. Rockridge Resources | Glencore PLC vs. Ameriwest Lithium | Glencore PLC vs. Osisko Metals Incorporated | Glencore PLC vs. Volt Lithium Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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