Correlation Between Charter Communications and Glencore PLC

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

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

Diversification Opportunities for Charter Communications and Glencore PLC

-0.69

Correlation Coefficient

Charter Communications  Glencore PLC

Excellent diversification

The 3 months correlation between Charter and Glencore is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Glencore PLC go up and down completely randomly.

Pair Corralation between Charter Communications and Glencore PLC

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the Glencore PLC. In addition to that, Charter Communications is 1.58 times more volatile than Glencore PLC. It trades about -0.2 of its total potential returns per unit of risk. Glencore PLC is currently generating about -0.11 per unit of volatility. If you would invest  453.00  in Glencore PLC on October 7, 2024 and sell it today you would lose (16.00) from holding Glencore PLC or give up 3.53% of portfolio value over 90 days.

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

Charter Communications  vs.  Glencore PLC

Charter Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications unveiled 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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Charter Communications and Glencore PLC

The main advantage of trading using opposite Charter Communications and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.