Correlation Between Freeport McMoRan and Public Service
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan and Public Service 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 Public Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Public Service Enterprise, you can compare the effects of market volatilities on Freeport McMoRan and Public Service 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 Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Public Service.
Diversification Opportunities for Freeport McMoRan and Public Service
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freeport and Public is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise 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 Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Public Service go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Public Service
Assuming the 90 days trading horizon Freeport McMoRan is expected to generate 2.7 times less return on investment than Public Service. In addition to that, Freeport McMoRan is 1.85 times more volatile than Public Service Enterprise. It trades about 0.01 of its total potential returns per unit of risk. Public Service Enterprise is currently generating about 0.07 per unit of volatility. 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 |
Freeport McMoRan vs. Public Service Enterprise
Performance |
| Timeline |
| Freeport McMoRan |
| Public Service Enterprise |
Freeport McMoRan and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Public Service
The main advantage of trading using opposite Freeport McMoRan and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service'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 |
| Public Service vs. Uniper SE | Public Service vs. Mulberry Group PLC | Public Service vs. London Security Plc | Public Service 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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