Correlation Between Core Lithium and Glencore PLC

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

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

Diversification Opportunities for Core Lithium and Glencore PLC

0.82

Correlation Coefficient

Core Lithium  Glencore PLC

Very poor diversification

The 3 months correlation between Core and Glencore is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Core Lithium and Glencore PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC ADR and Core Lithium 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 Core Lithium 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 ADR has no effect on the direction of Core Lithium i.e., Core Lithium and Glencore PLC go up and down completely randomly.

Pair Corralation between Core Lithium and Glencore PLC

Assuming the 90 days horizon Core Lithium is expected to generate 5.0 times more return on investment than Glencore PLC. However, Core Lithium is 5.0 times more volatile than Glencore PLC ADR. It trades about 0.12 of its potential returns per unit of risk. Glencore PLC ADR is currently generating about 0.15 per unit of risk. If you would invest  3.91  in Core Lithium on May 5, 2025 and sell it today you would earn a total of  2.64  from holding Core Lithium or generate 67.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.92%
Values	Daily Returns

Core Lithium  vs.  Glencore PLC ADR

Core Lithium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Core Lithium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Core Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Glencore PLC ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glencore PLC ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Glencore PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Core Lithium and Glencore PLC

The main advantage of trading using opposite Core Lithium and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Lithium 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 Core Lithium and Glencore PLC ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.