Correlation Between CVB Financial and Glencore PLC

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

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

Diversification Opportunities for CVB Financial and Glencore PLC

-0.28

Correlation Coefficient

CVB Financial  Glencore PLC

Very good diversification

The 3 months correlation between CVB and Glencore is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and CVB Financial 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 CVB Financial Corp 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 CVB Financial i.e., CVB Financial and Glencore PLC go up and down completely randomly.

Pair Corralation between CVB Financial and Glencore PLC

Assuming the 90 days horizon CVB Financial Corp is expected to under-perform the Glencore PLC. But the stock apears to be less risky and, when comparing its historical volatility, CVB Financial Corp is 1.1 times less risky than Glencore PLC. The stock trades about -0.19 of its potential returns per unit of risk. The Glencore PLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  427.00  in Glencore PLC on October 24, 2024 and sell it today you would earn a total of  22.00  from holding Glencore PLC or generate 5.15% return on investment over 90 days.

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

CVB Financial Corp  vs.  Glencore PLC

CVB Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVB Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CVB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Glencore PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Glencore PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CVB Financial and Glencore PLC

The main advantage of trading using opposite CVB Financial and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial 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 CVB Financial Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.