Correlation Between Faraday Copper and Copper Road
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Copper Road 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 Copper Road 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 Copper Road Resources, you can compare the effects of market volatilities on Faraday Copper and Copper Road 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 Copper Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Copper Road.
Diversification Opportunities for Faraday Copper and Copper Road
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Faraday and Copper is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Copper Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Road 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 Copper Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Road Resources has no effect on the direction of Faraday Copper i.e., Faraday Copper and Copper Road go up and down completely randomly.
Pair Corralation between Faraday Copper and Copper Road
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.15 times more return on investment than Copper Road. However, Faraday Copper Corp is 6.73 times less risky than Copper Road. It trades about -0.14 of its potential returns per unit of risk. Copper Road Resources is currently generating about -0.08 per unit of risk. If you would invest 89.00 in Faraday Copper Corp on August 31, 2024 and sell it today you would lose (6.00) from holding Faraday Copper Corp or give up 6.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Copper Road Resources
Performance |
| Timeline |
| Faraday Copper Corp |
| Copper Road Resources |
Faraday Copper and Copper Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Copper Road
The main advantage of trading using opposite Faraday Copper and Copper Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Copper Road 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 Copper Road will offset losses from the drop in Copper Road's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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