Correlation Between Empire Metals and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both Empire Metals and Freeport McMoRan 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 Empire Metals and Freeport McMoRan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and Freeport McMoRan, you can compare the effects of market volatilities on Empire Metals and Freeport McMoRan 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 Empire Metals with a short position of Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Freeport McMoRan.
Diversification Opportunities for Empire Metals and Freeport McMoRan
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Empire and Freeport is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan and Empire Metals 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 Empire Metals Limited are associated (or correlated) with Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Empire Metals i.e., Empire Metals and Freeport McMoRan go up and down completely randomly.
Pair Corralation between Empire Metals and Freeport McMoRan
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 2.6 times more return on investment than Freeport McMoRan. However, Empire Metals is 2.6 times more volatile than Freeport McMoRan. It trades about 0.08 of its potential returns per unit of risk. Freeport McMoRan is currently generating about 0.0 per unit of risk. If you would invest 183.00 in Empire Metals Limited on October 11, 2024 and sell it today you would earn a total of 577.00 from holding Empire Metals Limited or generate 315.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. Freeport McMoRan
Performance |
| Timeline |
| Empire Metals Limited |
| Freeport McMoRan |
Empire Metals and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Freeport McMoRan
The main advantage of trading using opposite Empire Metals and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| Empire Metals vs. Polar Capital Technology | Empire Metals vs. Pfeiffer Vacuum Technology | Empire Metals vs. Foresight Environmental Infrastructure | Empire Metals vs. Oxford Technology 2 |
| Freeport McMoRan vs. Empire Metals Limited | Freeport McMoRan vs. Lundin Mining Corp | Freeport McMoRan vs. Vitec Software Group | Freeport McMoRan vs. European Metals Holdings |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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