Correlation Between Freeport McMoran and Capstone Copper
Can any of the company-specific risk be diversified away by investing in both Freeport McMoran and Capstone Copper 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 Capstone Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoran Copper Gold and Capstone Copper Corp, you can compare the effects of market volatilities on Freeport McMoran and Capstone Copper 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 Capstone Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoran and Capstone Copper.
Diversification Opportunities for Freeport McMoran and Capstone Copper
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Freeport and Capstone is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold and Capstone Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Copper Corp 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 Copper Gold are associated (or correlated) with Capstone Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Copper Corp has no effect on the direction of Freeport McMoran i.e., Freeport McMoran and Capstone Copper go up and down completely randomly.
Pair Corralation between Freeport McMoran and Capstone Copper
Considering the 90-day investment horizon Freeport McMoran is expected to generate 4.2 times less return on investment than Capstone Copper. But when comparing it to its historical volatility, Freeport McMoran Copper Gold is 1.44 times less risky than Capstone Copper. It trades about 0.02 of its potential returns per unit of risk. Capstone Copper Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 432.00 in Capstone Copper Corp on August 31, 2024 and sell it today you would earn a total of 246.00 from holding Capstone Copper Corp or generate 56.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoran Copper Gold vs. Capstone Copper Corp
Performance |
| Timeline |
| Freeport McMoran Copper |
| Capstone Copper Corp |
Freeport McMoran and Capstone Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoran and Capstone Copper
The main advantage of trading using opposite Freeport McMoran and Capstone Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoran position performs unexpectedly, Capstone Copper 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 Capstone Copper will offset losses from the drop in Capstone Copper's long position.| Freeport McMoran vs. Ero Copper Corp | Freeport McMoran vs. Amerigo Resources | Freeport McMoran vs. Hudbay Minerals | Freeport McMoran vs. Southern Copper |
| Capstone Copper vs. Palantir Technologies Class | Capstone Copper vs. Scottie Resources Corp | Capstone Copper vs. FactSet Research Systems | Capstone Copper vs. Empire State Realty |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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