Correlation Between Freeport McMoRan and Alior Bank
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan and Alior Bank 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 Alior Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Alior Bank SA, you can compare the effects of market volatilities on Freeport McMoRan and Alior Bank 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 Alior Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Alior Bank.
Diversification Opportunities for Freeport McMoRan and Alior Bank
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Freeport and Alior is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Alior Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alior Bank SA 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 Alior Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alior Bank SA has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Alior Bank go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Alior Bank
Assuming the 90 days trading horizon Freeport McMoRan is expected to generate 1.6 times more return on investment than Alior Bank. However, Freeport McMoRan is 1.6 times more volatile than Alior Bank SA. It trades about 0.01 of its potential returns per unit of risk. Alior Bank SA is currently generating about 0.01 per unit of risk. If you would invest 3,823 in Freeport McMoRan on September 23, 2024 and sell it today you would earn a total of 75.00 from holding Freeport McMoRan or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Freeport McMoRan vs. Alior Bank SA
Performance |
| Timeline |
| Freeport McMoRan |
| Alior Bank SA |
Freeport McMoRan and Alior Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Alior Bank
The main advantage of trading using opposite Freeport McMoRan and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan position performs unexpectedly, Alior Bank 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 Alior Bank will offset losses from the drop in Alior Bank'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 |
| Alior Bank vs. Toyota Motor Corp | Alior Bank vs. SoftBank Group Corp | Alior Bank vs. OTP Bank Nyrt | Alior Bank vs. Freeport McMoRan |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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