Correlation Between Compagnie Financire and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both Compagnie Financire 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 Compagnie Financire and Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Financire Richemont and Glencore PLC, you can compare the effects of market volatilities on Compagnie Financire 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 Compagnie Financire with a short position of Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financire and Glencore PLC.
Diversification Opportunities for Compagnie Financire and Glencore PLC
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compagnie and Glencore is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and Compagnie Financire 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 Compagnie Financire Richemont 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 Compagnie Financire i.e., Compagnie Financire and Glencore PLC go up and down completely randomly.
Pair Corralation between Compagnie Financire and Glencore PLC
Assuming the 90 days trading horizon Compagnie Financire Richemont is expected to generate 1.0 times more return on investment than Glencore PLC. However, Compagnie Financire Richemont is 1.0 times less risky than Glencore PLC. It trades about 0.03 of its potential returns per unit of risk. Glencore PLC is currently generating about -0.02 per unit of risk. If you would invest 21,968,200 in Compagnie Financire Richemont on September 24, 2024 and sell it today you would earn a total of 5,558,700 from holding Compagnie Financire Richemont or generate 25.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Compagnie Financire Richemont vs. Glencore PLC
Performance |
Timeline |
Compagnie Financire |
Glencore PLC |
Compagnie Financire and Glencore PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Compagnie Financire and Glencore PLC
The main advantage of trading using opposite Compagnie Financire and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financire 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.Compagnie Financire vs. Sasol Ltd Bee | Compagnie Financire vs. Growthpoint Properties | Compagnie Financire vs. AfricaRhodium ETF | Compagnie Financire vs. CoreShares Preference Share |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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