Correlation Between Glencore PLC and Spey Resources

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

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

Diversification Opportunities for Glencore PLC and Spey Resources

-0.56

Correlation Coefficient

Glencore PLC  Spey Resources

Excellent diversification

The 3 months correlation between Glencore and Spey is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Spey Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spey Resources Corp and Glencore PLC 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 Glencore PLC are associated (or correlated) with Spey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spey Resources Corp has no effect on the direction of Glencore PLC i.e., Glencore PLC and Spey Resources go up and down completely randomly.

Pair Corralation between Glencore PLC and Spey Resources

Assuming the 90 days horizon Glencore PLC is expected to under-perform the Spey Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC is 4.63 times less risky than Spey Resources. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Spey Resources Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Spey Resources Corp on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Spey Resources Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.67%
Values	Daily Returns

Glencore PLC  vs.  Spey Resources Corp

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 fragile 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.

Spey Resources Corp

Risk-Adjusted Performance

Insignificant

Over the last 90 days Spey Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Spey Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glencore PLC and Spey Resources

The main advantage of trading using opposite Glencore PLC and Spey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Spey Resources 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 Spey Resources will offset losses from the drop in Spey Resources' long position.

The idea behind Glencore PLC and Spey Resources Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.