Correlation Between Public Service and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both Public Service and Freeport McMoRan 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 Public Service and Freeport McMoRan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and Freeport McMoRan, you can compare the effects of market volatilities on Public Service and Freeport McMoRan 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 Public Service with a short position of Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and Freeport McMoRan.
Diversification Opportunities for Public Service and Freeport McMoRan
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Public and Freeport is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan and Public Service 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 Public Service Enterprise are associated (or correlated) with Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Public Service i.e., Public Service and Freeport McMoRan go up and down completely randomly.
Pair Corralation between Public Service and Freeport McMoRan
Assuming the 90 days trading horizon Public Service Enterprise is expected to generate 0.54 times more return on investment than Freeport McMoRan. However, Public Service Enterprise is 1.85 times less risky than Freeport McMoRan. It trades about 0.07 of its potential returns per unit of risk. Freeport McMoRan is currently generating about 0.01 per unit of risk. If you would invest 5,882 in Public Service Enterprise on September 23, 2024 and sell it today you would earn a total of 2,553 from holding Public Service Enterprise or generate 43.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.81% |
| Values | Daily Returns |
Public Service Enterprise vs. Freeport McMoRan
Performance |
| Timeline |
| Public Service Enterprise |
| Freeport McMoRan |
Public Service and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and Freeport McMoRan
The main advantage of trading using opposite Public Service and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| Public Service vs. Uniper SE | Public Service vs. Mulberry Group PLC | Public Service vs. London Security Plc | Public Service vs. Triad Group PLC |
| Freeport McMoRan vs. Uniper SE | Freeport McMoRan vs. Mulberry Group PLC | Freeport McMoRan vs. London Security Plc | Freeport McMoRan vs. Triad Group PLC |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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