Correlation Between Southern Copper and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Fair Oaks 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 Southern Copper and Fair Oaks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper Corp and Fair Oaks Income, you can compare the effects of market volatilities on Southern Copper and Fair Oaks 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 Southern Copper with a short position of Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Fair Oaks.
Diversification Opportunities for Southern Copper and Fair Oaks
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Southern and Fair is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper Corp and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income and Southern Copper 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 Southern Copper Corp are associated (or correlated) with Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of Southern Copper i.e., Southern Copper and Fair Oaks go up and down completely randomly.
Pair Corralation between Southern Copper and Fair Oaks
Assuming the 90 days trading horizon Southern Copper Corp is expected to under-perform the Fair Oaks. In addition to that, Southern Copper is 2.68 times more volatile than Fair Oaks Income. It trades about -0.1 of its total potential returns per unit of risk. Fair Oaks Income is currently generating about 0.21 per unit of volatility. If you would invest 55.00 in Fair Oaks Income on September 19, 2024 and sell it today you would earn a total of 2.00 from holding Fair Oaks Income or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper Corp vs. Fair Oaks Income
Performance |
| Timeline |
| Southern Copper Corp |
| Fair Oaks Income |
Southern Copper and Fair Oaks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and Fair Oaks
The main advantage of trading using opposite Southern Copper and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Fair Oaks 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 Fair Oaks will offset losses from the drop in Fair Oaks' long position.| Southern Copper vs. Silvercorp Metals | Southern Copper vs. Caledonia Mining | Southern Copper vs. Ecclesiastical Insurance Office | Southern Copper vs. Thor Mining PLC |
| Fair Oaks vs. Infrastrutture Wireless Italiane | Fair Oaks vs. Take Two Interactive Software | Fair Oaks vs. Vitec Software Group | Fair Oaks vs. Extra Space Storage |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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