Correlation Between Freeport McMoRan and Optima Health
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan and Optima Health 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 Optima Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Optima Health plc, you can compare the effects of market volatilities on Freeport McMoRan and Optima Health 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 Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Optima Health.
Diversification Opportunities for Freeport McMoRan and Optima Health
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freeport and Optima is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health plc 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 Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Optima Health go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Optima Health
Assuming the 90 days trading horizon Freeport McMoRan is expected to generate 1.86 times more return on investment than Optima Health. However, Freeport McMoRan is 1.86 times more volatile than Optima Health plc. It trades about 0.01 of its potential returns per unit of risk. Optima Health plc is currently generating about -0.03 per unit of risk. If you would invest 3,823 in Freeport McMoRan on September 24, 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 | Insignificant |
| Accuracy | 12.57% |
| Values | Daily Returns |
Freeport McMoRan vs. Optima Health plc
Performance |
| Timeline |
| Freeport McMoRan |
| Optima Health plc |
Freeport McMoRan and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Optima Health
The main advantage of trading using opposite Freeport McMoRan and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan position performs unexpectedly, Optima Health 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 Optima Health will offset losses from the drop in Optima Health's long position.| Freeport McMoRan vs. Lowland Investment Co | Freeport McMoRan vs. Supermarket Income REIT | Freeport McMoRan vs. Aberdeen Diversified Income | Freeport McMoRan vs. Bankers Investment Trust |
| Optima Health vs. Toyota Motor Corp | Optima Health vs. SoftBank Group Corp | Optima Health vs. OTP Bank Nyrt | Optima Health 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |