Correlation Between Freeport McMoran and Element 29
Can any of the company-specific risk be diversified away by investing in both Freeport McMoran and Element 29 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 Element 29 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 Element 29 Resources, you can compare the effects of market volatilities on Freeport McMoran and Element 29 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 Element 29. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoran and Element 29.
Diversification Opportunities for Freeport McMoran and Element 29
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Freeport and Element is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold and Element 29 Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element 29 Resources 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 Element 29. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element 29 Resources has no effect on the direction of Freeport McMoran i.e., Freeport McMoran and Element 29 go up and down completely randomly.
Pair Corralation between Freeport McMoran and Element 29
Considering the 90-day investment horizon Freeport McMoran Copper Gold is expected to under-perform the Element 29. But the stock apears to be less risky and, when comparing its historical volatility, Freeport McMoran Copper Gold is 3.14 times less risky than Element 29. The stock trades about -0.05 of its potential returns per unit of risk. The Element 29 Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Element 29 Resources on August 30, 2024 and sell it today you would earn a total of 19.00 from holding Element 29 Resources or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoran Copper Gold vs. Element 29 Resources
Performance |
| Timeline |
| Freeport McMoran Copper |
| Element 29 Resources |
Freeport McMoran and Element 29 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoran and Element 29
The main advantage of trading using opposite Freeport McMoran and Element 29 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoran position performs unexpectedly, Element 29 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 Element 29 will offset losses from the drop in Element 29's long position.| Freeport McMoran vs. Franco Nevada | Freeport McMoran vs. Osisko Gold Ro | Freeport McMoran vs. Sandstorm Gold Ltd | Freeport McMoran vs. Royal Gold |
| Element 29 vs. Freeport McMoran Copper Gold | Element 29 vs. Ero Copper Corp | Element 29 vs. Amerigo Resources | Element 29 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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