Correlation Between EMX Royalty and Glencore PLC

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

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

Diversification Opportunities for EMX Royalty and Glencore PLC

-0.42

Correlation Coefficient

EMX Royalty  Glencore PLC

Very good diversification

The 3 months correlation between EMX and Glencore is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and EMX Royalty 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 EMX Royalty 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 EMX Royalty i.e., EMX Royalty and Glencore PLC go up and down completely randomly.

Pair Corralation between EMX Royalty and Glencore PLC

Considering the 90-day investment horizon EMX Royalty Corp is expected to generate 0.77 times more return on investment than Glencore PLC. However, EMX Royalty Corp is 1.3 times less risky than Glencore PLC. It trades about 0.13 of its potential returns per unit of risk. Glencore PLC is currently generating about -0.06 per unit of risk. If you would invest  167.00  in EMX Royalty Corp on December 19, 2024 and sell it today you would earn a total of  22.00  from holding EMX Royalty Corp or generate 13.17% return on investment over 90 days.

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

EMX Royalty Corp  vs.  Glencore PLC

EMX Royalty Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMX Royalty Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, EMX Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak 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 EMX Royalty and Glencore PLC

The main advantage of trading using opposite EMX Royalty and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMX Royalty 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 EMX Royalty 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.