Correlation Between Freeport McMoRan and Ametek
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan and Ametek 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 Freeport McMoRan and Ametek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Ametek Inc, you can compare the effects of market volatilities on Freeport McMoRan and Ametek 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 Freeport McMoRan with a short position of Ametek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Ametek.
Diversification Opportunities for Freeport McMoRan and Ametek
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Freeport and Ametek is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Freeport McMoRan 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 Freeport McMoRan are associated (or correlated) with Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Ametek go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Ametek
Assuming the 90 days trading horizon Freeport McMoRan is expected to under-perform the Ametek. In addition to that, Freeport McMoRan is 2.88 times more volatile than Ametek Inc. It trades about -0.24 of its total potential returns per unit of risk. Ametek Inc is currently generating about -0.43 per unit of volatility. If you would invest 19,680 in Ametek Inc on September 23, 2024 and sell it today you would lose (1,293) from holding Ametek Inc or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoRan vs. Ametek Inc
Performance |
| Timeline |
| Freeport McMoRan |
| Ametek Inc |
Freeport McMoRan and Ametek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Ametek
The main advantage of trading using opposite Freeport McMoRan and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan position performs unexpectedly, Ametek 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 Ametek will offset losses from the drop in Ametek's long position.| Freeport McMoRan vs. Uniper SE | Freeport McMoRan vs. Mulberry Group PLC | Freeport McMoRan vs. London Security Plc | Freeport McMoRan vs. Triad Group PLC |
| Ametek vs. Samsung Electronics Co | Ametek vs. Samsung Electronics Co | Ametek vs. Hyundai Motor | Ametek vs. Reliance Industries Ltd |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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