Correlation Between Glencore PLC and SPAR

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

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

Diversification Opportunities for Glencore PLC and SPAR

-0.67

Correlation Coefficient

Glencore PLC  SPAR

Excellent diversification

The 3 months correlation between Glencore and SPAR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR Group 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 SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of Glencore PLC i.e., Glencore PLC and SPAR go up and down completely randomly.

Pair Corralation between Glencore PLC and SPAR

Assuming the 90 days trading horizon Glencore PLC is expected to under-perform the SPAR. In addition to that, Glencore PLC is 1.02 times more volatile than SPAR Group. It trades about -0.1 of its total potential returns per unit of risk. SPAR Group is currently generating about 0.27 per unit of volatility. If you would invest  1,292,100  in SPAR Group on October 9, 2024 and sell it today you would earn a total of  179,400  from holding SPAR Group or generate 13.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.44%
Values	Daily Returns

Glencore PLC  vs.  SPAR Group

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. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

SPAR Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPAR Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, SPAR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glencore PLC and SPAR

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

The idea behind Glencore PLC and SPAR Group 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.