Correlation Between Faraday Copper and Eros Resources
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Eros Resources 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 Eros Resources 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 Eros Resources Corp, you can compare the effects of market volatilities on Faraday Copper and Eros Resources 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 Eros Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Eros Resources.
Diversification Opportunities for Faraday Copper and Eros Resources
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and Eros is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Eros Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros Resources 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 Eros Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros Resources Corp has no effect on the direction of Faraday Copper i.e., Faraday Copper and Eros Resources go up and down completely randomly.
Pair Corralation between Faraday Copper and Eros Resources
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.3 times more return on investment than Eros Resources. However, Faraday Copper Corp is 3.28 times less risky than Eros Resources. It trades about -0.02 of its potential returns per unit of risk. Eros Resources Corp is currently generating about -0.12 per unit of risk. If you would invest 91.00 in Faraday Copper Corp on August 26, 2024 and sell it today you would lose (1.00) from holding Faraday Copper Corp or give up 1.1% 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. Eros Resources Corp
Performance |
| Timeline |
| Faraday Copper Corp |
| Eros Resources Corp |
Faraday Copper and Eros Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Eros Resources
The main advantage of trading using opposite Faraday Copper and Eros Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Eros Resources 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 Eros Resources will offset losses from the drop in Eros Resources' long position.| Faraday Copper vs. First Majestic Silver | Faraday Copper vs. Ivanhoe Energy | Faraday Copper vs. Orezone Gold Corp |
| Eros Resources vs. First Majestic Silver | Eros Resources vs. Ivanhoe Energy | Eros Resources vs. Orezone Gold Corp | Eros Resources vs. Faraday Copper 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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