Correlation Between Freeport McMoran and Taseko Mines
Can any of the company-specific risk be diversified away by investing in both Freeport McMoran and Taseko Mines 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 Taseko Mines 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 Taseko Mines, you can compare the effects of market volatilities on Freeport McMoran and Taseko Mines 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 Taseko Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoran and Taseko Mines.
Diversification Opportunities for Freeport McMoran and Taseko Mines
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Freeport and Taseko is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold and Taseko Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taseko Mines 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 Taseko Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taseko Mines has no effect on the direction of Freeport McMoran i.e., Freeport McMoran and Taseko Mines go up and down completely randomly.
Pair Corralation between Freeport McMoran and Taseko Mines
Considering the 90-day investment horizon Freeport McMoran is expected to generate 2.69 times less return on investment than Taseko Mines. But when comparing it to its historical volatility, Freeport McMoran Copper Gold is 1.59 times less risky than Taseko Mines. It trades about 0.02 of its potential returns per unit of risk. Taseko Mines is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 172.00 in Taseko Mines on August 31, 2024 and sell it today you would earn a total of 28.00 from holding Taseko Mines or generate 16.28% 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. Taseko Mines
Performance |
| Timeline |
| Freeport McMoran Copper |
| Taseko Mines |
Freeport McMoran and Taseko Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoran and Taseko Mines
The main advantage of trading using opposite Freeport McMoran and Taseko Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoran position performs unexpectedly, Taseko Mines 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 Taseko Mines will offset losses from the drop in Taseko Mines' long position.| Freeport McMoran vs. Ero Copper Corp | Freeport McMoran vs. Amerigo Resources | Freeport McMoran vs. Hudbay Minerals | Freeport McMoran vs. Southern Copper |
| Taseko Mines vs. Capstone Copper Corp | Taseko Mines vs. Hudbay Minerals | Taseko Mines vs. Ero Copper Corp | Taseko Mines vs. CopperCorp Resources |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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