Correlation Between We Buy and Glencore PLC

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

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

Diversification Opportunities for We Buy and Glencore PLC

0.09

Correlation Coefficient

We Buy  Glencore PLC

Significant diversification

The 3 months correlation between WBC and Glencore is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding We Buy Cars and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC and We Buy 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 We Buy Cars 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 We Buy i.e., We Buy and Glencore PLC go up and down completely randomly.

Pair Corralation between We Buy and Glencore PLC

Assuming the 90 days trading horizon We Buy Cars is expected to generate 1.09 times more return on investment than Glencore PLC. However, We Buy is 1.09 times more volatile than Glencore PLC. It trades about 0.0 of its potential returns per unit of risk. Glencore PLC is currently generating about -0.11 per unit of risk. If you would invest  458,000  in We Buy Cars on December 4, 2024 and sell it today you would lose (7,400) from holding We Buy Cars or give up 1.62% of portfolio value over 90 days.

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

We Buy Cars  vs.  Glencore PLC

We Buy Cars

Risk-Adjusted Performance

Very Weak

Over the last 90 days We Buy Cars has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, We Buy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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. In spite of latest unsteady 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.

Pair Trading with We Buy and Glencore PLC

The main advantage of trading using opposite We Buy and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if We Buy 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 We Buy Cars 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.