Correlation Between Faraday Copper and GoldMining
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on Faraday Copper and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and GoldMining.
Diversification Opportunities for Faraday Copper and GoldMining
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Faraday and GoldMining is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Faraday Copper i.e., Faraday Copper and GoldMining go up and down completely randomly.
Pair Corralation between Faraday Copper and GoldMining
Assuming the 90 days trading horizon Faraday Copper Corp is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Faraday Copper Corp is 1.31 times less risky than GoldMining. The stock trades about -0.16 of its potential returns per unit of risk. The GoldMining is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 129.00 in GoldMining on September 1, 2024 and sell it today you would lose (6.00) from holding GoldMining or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. GoldMining
Performance |
| Timeline |
| Faraday Copper Corp |
| GoldMining |
Faraday Copper and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and GoldMining
The main advantage of trading using opposite Faraday Copper and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| GoldMining vs. First Majestic Silver | GoldMining vs. Ivanhoe Energy | GoldMining vs. Orezone Gold Corp | GoldMining 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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