Correlation Between Element 29 and Freeport McMoran
Can any of the company-specific risk be diversified away by investing in both Element 29 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 Element 29 and Freeport McMoran into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element 29 Resources and Freeport McMoran Copper Gold, you can compare the effects of market volatilities on Element 29 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 Element 29 with a short position of Freeport McMoran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element 29 and Freeport McMoran.
Diversification Opportunities for Element 29 and Freeport McMoran
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Element and Freeport is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Element 29 Resources and Freeport McMoran Copper Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoran Copper and Element 29 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 Element 29 Resources 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 Copper has no effect on the direction of Element 29 i.e., Element 29 and Freeport McMoran go up and down completely randomly.
Pair Corralation between Element 29 and Freeport McMoran
Assuming the 90 days horizon Element 29 Resources is expected to generate 2.64 times more return on investment than Freeport McMoran. However, Element 29 is 2.64 times more volatile than Freeport McMoran Copper Gold. It trades about 0.12 of its potential returns per unit of risk. Freeport McMoran Copper Gold is currently generating about -0.07 per unit of risk. If you would invest 36.00 in Element 29 Resources on September 2, 2024 and sell it today you would earn a total of 4.00 from holding Element 29 Resources or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Element 29 Resources vs. Freeport McMoran Copper Gold
Performance |
| Timeline |
| Element 29 Resources |
| Freeport McMoran Copper |
Element 29 and Freeport McMoran Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element 29 and Freeport McMoran
The main advantage of trading using opposite Element 29 and Freeport McMoran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element 29 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.| Element 29 vs. Freeport McMoran Copper Gold | Element 29 vs. Ero Copper Corp | Element 29 vs. Amerigo Resources | Element 29 vs. Hudbay Minerals |
| Freeport McMoran vs. Ero Copper Corp | Freeport McMoran vs. Amerigo Resources | Freeport McMoran vs. Hudbay Minerals | Freeport McMoran vs. Southern Copper |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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