Correlation Between Faraday Copper and Eastern Platinum
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Eastern Platinum 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 Eastern Platinum 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 Eastern Platinum Limited, you can compare the effects of market volatilities on Faraday Copper and Eastern Platinum 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 Eastern Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Eastern Platinum.
Diversification Opportunities for Faraday Copper and Eastern Platinum
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and Eastern is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Eastern Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Platinum 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 Eastern Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Platinum has no effect on the direction of Faraday Copper i.e., Faraday Copper and Eastern Platinum go up and down completely randomly.
Pair Corralation between Faraday Copper and Eastern Platinum
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.41 times more return on investment than Eastern Platinum. However, Faraday Copper Corp is 2.43 times less risky than Eastern Platinum. It trades about -0.23 of its potential returns per unit of risk. Eastern Platinum Limited is currently generating about -0.12 per unit of risk. If you would invest 90.00 in Faraday Copper Corp on September 4, 2024 and sell it today you would lose (10.00) from holding Faraday Copper Corp or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Eastern Platinum Limited
Performance |
| Timeline |
| Faraday Copper Corp |
| Eastern Platinum |
Faraday Copper and Eastern Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Eastern Platinum
The main advantage of trading using opposite Faraday Copper and Eastern Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Eastern Platinum 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 Eastern Platinum will offset losses from the drop in Eastern Platinum's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| Eastern Platinum vs. Platinum Group Metals | Eastern Platinum vs. Entree Resources | Eastern Platinum vs. Aura Minerals | Eastern Platinum vs. Minco Silver |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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