Correlation Between Dave Busters and Glencore PLC

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

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

Diversification Opportunities for Dave Busters and Glencore PLC

-0.17

Correlation Coefficient

Dave Busters  Glencore PLC

Good diversification

The 3 months correlation between Dave and Glencore is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and Glencore PLC go up and down completely randomly.

Pair Corralation between Dave Busters and Glencore PLC

Assuming the 90 days horizon Dave Busters Entertainment is expected to generate 1.75 times more return on investment than Glencore PLC. However, Dave Busters is 1.75 times more volatile than Glencore PLC. It trades about 0.1 of its potential returns per unit of risk. Glencore PLC is currently generating about 0.04 per unit of risk. If you would invest  2,820  in Dave Busters Entertainment on September 12, 2024 and sell it today you would earn a total of  640.00  from holding Dave Busters Entertainment or generate 22.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Dave Busters Entertainment  vs.  Glencore PLC

Dave Busters Enterta

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Busters Entertainment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dave Busters reported solid returns over the last few months and may actually be approaching a breakup point.

Glencore PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Glencore PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Glencore PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dave Busters and Glencore PLC

The main advantage of trading using opposite Dave Busters and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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.

The idea behind Dave Busters Entertainment and Glencore PLC 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.