Correlation Between Faraday Copper and Foran Mining
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Foran Mining 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 Foran Mining 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 Foran Mining, you can compare the effects of market volatilities on Faraday Copper and Foran Mining 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 Foran Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Foran Mining.
Diversification Opportunities for Faraday Copper and Foran Mining
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Faraday and Foran is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Foran Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foran Mining 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 Foran Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foran Mining has no effect on the direction of Faraday Copper i.e., Faraday Copper and Foran Mining go up and down completely randomly.
Pair Corralation between Faraday Copper and Foran Mining
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 1.07 times more return on investment than Foran Mining. However, Faraday Copper is 1.07 times more volatile than Foran Mining. It trades about 0.04 of its potential returns per unit of risk. Foran Mining is currently generating about 0.03 per unit of risk. If you would invest 85.00 in Faraday Copper Corp on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Faraday Copper Corp or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Foran Mining
Performance |
| Timeline |
| Faraday Copper Corp |
| Foran Mining |
Faraday Copper and Foran Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Foran Mining
The main advantage of trading using opposite Faraday Copper and Foran Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Foran Mining 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 Foran Mining will offset losses from the drop in Foran Mining's long position.The idea behind Faraday Copper Corp and Foran Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Foran Mining vs. First Majestic Silver | Foran Mining vs. Ivanhoe Energy | Foran Mining vs. Orezone Gold Corp | Foran Mining 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |