Correlation Between Faraday Copper and New Pacific
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and New Pacific 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 New Pacific 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 New Pacific Metals, you can compare the effects of market volatilities on Faraday Copper and New Pacific 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 New Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and New Pacific.
Diversification Opportunities for Faraday Copper and New Pacific
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and New is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific 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 New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of Faraday Copper i.e., Faraday Copper and New Pacific go up and down completely randomly.
Pair Corralation between Faraday Copper and New Pacific
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.61 times more return on investment than New Pacific. However, Faraday Copper Corp is 1.63 times less risky than New Pacific. It trades about -0.14 of its potential returns per unit of risk. New Pacific Metals is currently generating about -0.21 per unit of risk. If you would invest 89.00 in Faraday Copper Corp on August 31, 2024 and sell it today you would lose (6.00) from holding Faraday Copper Corp or give up 6.74% 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. New Pacific Metals
Performance |
| Timeline |
| Faraday Copper Corp |
| New Pacific Metals |
Faraday Copper and New Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and New Pacific
The main advantage of trading using opposite Faraday Copper and New Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, New Pacific 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 New Pacific will offset losses from the drop in New Pacific's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| New Pacific vs. SilverCrest Metals | New Pacific vs. Skeena Resources | New Pacific vs. Ascot Resources | New Pacific vs. Orla Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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