Correlation Between Ero Copper and Copper Mountain
Can any of the company-specific risk be diversified away by investing in both Ero Copper and Copper Mountain 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 Ero Copper and Copper Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ero Copper Corp and Copper Mountain Mining, you can compare the effects of market volatilities on Ero Copper and Copper Mountain 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 Ero Copper with a short position of Copper Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ero Copper and Copper Mountain.
Diversification Opportunities for Ero Copper and Copper Mountain
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ero and Copper is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp and Copper Mountain Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Mountain Mining and Ero Copper 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 Ero Copper Corp are associated (or correlated) with Copper Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Mountain Mining has no effect on the direction of Ero Copper i.e., Ero Copper and Copper Mountain go up and down completely randomly.
Pair Corralation between Ero Copper and Copper Mountain
Considering the 90-day investment horizon Ero Copper Corp is expected to generate 0.54 times more return on investment than Copper Mountain. However, Ero Copper Corp is 1.86 times less risky than Copper Mountain. It trades about -0.33 of its potential returns per unit of risk. Copper Mountain Mining is currently generating about -0.28 per unit of risk. If you would invest 1,933 in Ero Copper Corp on August 29, 2024 and sell it today you would lose (417.00) from holding Ero Copper Corp or give up 21.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ero Copper Corp vs. Copper Mountain Mining
Performance |
| Timeline |
| Ero Copper Corp |
| Copper Mountain Mining |
Ero Copper and Copper Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ero Copper and Copper Mountain
The main advantage of trading using opposite Ero Copper and Copper Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ero Copper position performs unexpectedly, Copper Mountain 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 Copper Mountain will offset losses from the drop in Copper Mountain's long position.| Ero Copper vs. Freeport McMoran Copper Gold | Ero Copper vs. Amerigo Resources | Ero Copper vs. Hudbay Minerals | Ero Copper vs. Capstone Copper Corp |
| Copper Mountain vs. Ero Copper Corp | Copper Mountain vs. Copper Fox Metals | Copper Mountain vs. First Quantum Minerals | Copper Mountain vs. Hudbay Minerals |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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