Correlation Between Faraday Copper and K2 Gold
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and K2 Gold 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 K2 Gold 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 K2 Gold, you can compare the effects of market volatilities on Faraday Copper and K2 Gold 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 K2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and K2 Gold.
Diversification Opportunities for Faraday Copper and K2 Gold
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Faraday and KTO is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and K2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Gold 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 K2 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Gold has no effect on the direction of Faraday Copper i.e., Faraday Copper and K2 Gold go up and down completely randomly.
Pair Corralation between Faraday Copper and K2 Gold
Assuming the 90 days trading horizon Faraday Copper is expected to generate 2.7 times less return on investment than K2 Gold. But when comparing it to its historical volatility, Faraday Copper Corp is 3.3 times less risky than K2 Gold. It trades about 0.07 of its potential returns per unit of risk. K2 Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11.00 in K2 Gold on September 3, 2024 and sell it today you would earn a total of 3.00 from holding K2 Gold or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. K2 Gold
Performance |
| Timeline |
| Faraday Copper Corp |
| K2 Gold |
Faraday Copper and K2 Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and K2 Gold
The main advantage of trading using opposite Faraday Copper and K2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, K2 Gold 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 K2 Gold will offset losses from the drop in K2 Gold's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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