Correlation Between Glencore Plc and CHAMPION IRON

Can any of the company-specific risk be diversified away by investing in both Glencore Plc and CHAMPION IRON 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 Glencore Plc and CHAMPION IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Glencore plc and CHAMPION IRON, you can compare the effects of market volatilities on Glencore Plc and CHAMPION IRON 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 Glencore Plc with a short position of CHAMPION IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore Plc and CHAMPION IRON.

Diversification Opportunities for Glencore Plc and CHAMPION IRON

0.78

Correlation Coefficient

Glencore Plc  CHAMPION IRON

Poor diversification

The 3 months correlation between Glencore and CHAMPION is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Glencore plc and CHAMPION IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAMPION IRON and Glencore Plc 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 Glencore plc are associated (or correlated) with CHAMPION IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAMPION IRON has no effect on the direction of Glencore Plc i.e., Glencore Plc and CHAMPION IRON go up and down completely randomly.

Pair Corralation between Glencore Plc and CHAMPION IRON

Assuming the 90 days trading horizon Glencore plc is expected to under-perform the CHAMPION IRON. But the stock apears to be less risky and, when comparing its historical volatility, Glencore plc is 1.2 times less risky than CHAMPION IRON. The stock trades about -0.1 of its potential returns per unit of risk. The CHAMPION IRON is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  346.00  in CHAMPION IRON on December 23, 2024 and sell it today you would lose (46.00) from holding CHAMPION IRON or give up 13.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Glencore plc  vs.  CHAMPION IRON

Glencore plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glencore plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CHAMPION IRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHAMPION IRON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Glencore Plc and CHAMPION IRON

The main advantage of trading using opposite Glencore Plc and CHAMPION IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore Plc position performs unexpectedly, CHAMPION IRON 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 CHAMPION IRON will offset losses from the drop in CHAMPION IRON's long position.

The idea behind Glencore plc and CHAMPION IRON pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.