Correlation Between Freeport McMoRan and Promotora
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan and Promotora 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 Promotora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Promotora y Operadora, you can compare the effects of market volatilities on Freeport McMoRan and Promotora 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 Promotora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Promotora.
Diversification Opportunities for Freeport McMoRan and Promotora
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Freeport and Promotora is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Promotora y Operadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promotora y Operadora 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 Promotora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promotora y Operadora has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Promotora go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Promotora
Assuming the 90 days trading horizon Freeport McMoRan is expected to generate 1.12 times less return on investment than Promotora. In addition to that, Freeport McMoRan is 1.49 times more volatile than Promotora y Operadora. It trades about 0.02 of its total potential returns per unit of risk. Promotora y Operadora is currently generating about 0.03 per unit of volatility. If you would invest 16,841 in Promotora y Operadora on December 1, 2024 and sell it today you would earn a total of 3,630 from holding Promotora y Operadora or generate 21.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Freeport McMoRan vs. Promotora y Operadora
Performance |
| Timeline |
| Freeport McMoRan |
| Promotora y Operadora |
Freeport McMoRan and Promotora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Promotora
The main advantage of trading using opposite Freeport McMoRan and Promotora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan position performs unexpectedly, Promotora 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 Promotora will offset losses from the drop in Promotora's long position.| Freeport McMoRan vs. Desarrolladora Homex SAB | Freeport McMoRan vs. Micron Technology | Freeport McMoRan vs. United Airlines Holdings | Freeport McMoRan vs. First Majestic Silver |
| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
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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