Correlation Between Glencore PLC and Evergold Corp

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

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

Diversification Opportunities for Glencore PLC and Evergold Corp

0.21

Correlation Coefficient

Glencore PLC  Evergold Corp

Modest diversification

The @@bw1eo months correlation between Glencore and Evergold is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR and Evergold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergold 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 ADR are associated (or correlated) with Evergold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergold Corp has no effect on the direction of Glencore PLC i.e., Glencore PLC and Evergold Corp go up and down completely randomly.

Pair Corralation between Glencore PLC and Evergold Corp

Assuming the 90 days horizon Glencore PLC is expected to generate 24.84 times less return on investment than Evergold Corp. But when comparing it to its historical volatility, Glencore PLC ADR is 9.33 times less risky than Evergold Corp. It trades about 0.02 of its potential returns per unit of risk. Evergold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8.60  in Evergold Corp on February 4, 2024 and sell it today you would lose (5.60) from holding Evergold Corp or give up 65.12% of portfolio value over 90 days.

Time Period	@@bw1EO Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Glencore PLC ADR  vs.  Evergold Corp

Glencore PLC ADR

Risk-Adjusted Performance

1 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glencore PLC ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Glencore PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Evergold Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evergold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evergold Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glencore PLC and Evergold Corp

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

The idea behind Glencore PLC ADR and Evergold 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.