Correlation Between Faraday Copper and American Creek
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and American Creek 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 Faraday Copper and American Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faraday Copper Corp and American Creek Resources, you can compare the effects of market volatilities on Faraday Copper and American Creek 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 Faraday Copper with a short position of American Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and American Creek.
Diversification Opportunities for Faraday Copper and American Creek
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and American is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and American Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Creek Resources and Faraday 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 Faraday Copper Corp are associated (or correlated) with American Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Creek Resources has no effect on the direction of Faraday Copper i.e., Faraday Copper and American Creek go up and down completely randomly.
Pair Corralation between Faraday Copper and American Creek
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.63 times more return on investment than American Creek. However, Faraday Copper Corp is 1.58 times less risky than American Creek. It trades about -0.16 of its potential returns per unit of risk. American Creek Resources is currently generating about -0.11 per unit of risk. If you would invest 90.00 in Faraday Copper Corp on September 1, 2024 and sell it today you would lose (7.00) from holding Faraday Copper Corp or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Faraday Copper Corp vs. American Creek Resources
Performance |
| Timeline |
| Faraday Copper Corp |
| American Creek Resources |
Faraday Copper and American Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and American Creek
The main advantage of trading using opposite Faraday Copper and American Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, American Creek 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 American Creek will offset losses from the drop in American Creek's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| American Creek vs. Minaurum Gold | American Creek vs. Dolly Varden Silver | American Creek vs. Santacruz Silv | American Creek vs. GoGold 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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