Correlation Between Faraday Copper and Hannan Metals
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Hannan 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 Hannan 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 Hannan Metals, you can compare the effects of market volatilities on Faraday Copper and Hannan 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 Hannan Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Hannan Metals.
Diversification Opportunities for Faraday Copper and Hannan Metals
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Faraday and Hannan is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Hannan Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannan Metals 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 Hannan Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannan Metals has no effect on the direction of Faraday Copper i.e., Faraday Copper and Hannan Metals go up and down completely randomly.
Pair Corralation between Faraday Copper and Hannan Metals
Assuming the 90 days trading horizon Faraday Copper Corp is expected to under-perform the Hannan Metals. But the stock apears to be less risky and, when comparing its historical volatility, Faraday Copper Corp is 2.64 times less risky than Hannan Metals. The stock trades about -0.16 of its potential returns per unit of risk. The Hannan Metals is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Hannan Metals on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Hannan Metals or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Hannan Metals
Performance |
| Timeline |
| Faraday Copper Corp |
| Hannan Metals |
Faraday Copper and Hannan Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Hannan Metals
The main advantage of trading using opposite Faraday Copper and Hannan Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Hannan 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 Hannan Metals will offset losses from the drop in Hannan Metals' long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| Hannan Metals vs. Kiplin Metals | Hannan Metals vs. Pure Energy Minerals | Hannan Metals vs. Noram Lithium Corp | Hannan Metals vs. Minnova 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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