Correlation Between Faraday Copper and Emergent Metals
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Emergent Metals 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 Emergent Metals 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 Emergent Metals Corp, you can compare the effects of market volatilities on Faraday Copper and Emergent Metals 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 Emergent Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Emergent Metals.
Diversification Opportunities for Faraday Copper and Emergent Metals
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Faraday and Emergent is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Emergent Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Metals Corp 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 Emergent Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Metals Corp has no effect on the direction of Faraday Copper i.e., Faraday Copper and Emergent Metals go up and down completely randomly.
Pair Corralation between Faraday Copper and Emergent Metals
Assuming the 90 days trading horizon Faraday Copper is expected to generate 1.7 times less return on investment than Emergent Metals. But when comparing it to its historical volatility, Faraday Copper Corp is 2.54 times less risky than Emergent Metals. It trades about 0.04 of its potential returns per unit of risk. Emergent Metals Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Emergent Metals Corp on September 2, 2024 and sell it today you would lose (12.00) from holding Emergent Metals Corp or give up 52.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Emergent Metals Corp
Performance |
| Timeline |
| Faraday Copper Corp |
| Emergent Metals Corp |
Faraday Copper and Emergent Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Emergent Metals
The main advantage of trading using opposite Faraday Copper and Emergent Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Emergent Metals 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 Emergent Metals will offset losses from the drop in Emergent Metals' long position.| Faraday Copper vs. First Majestic Silver | Faraday Copper vs. Ivanhoe Energy | Faraday Copper vs. Orezone Gold Corp |
| Emergent Metals vs. Dynasty Gold Corp | Emergent Metals vs. Eastfield Resources | Emergent Metals vs. Conquest Resources | Emergent Metals vs. Goldcliff Resource Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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