Correlation Between Faraday Copper and Chatham Rock
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Chatham Rock 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 Chatham Rock 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 Chatham Rock Phosphate, you can compare the effects of market volatilities on Faraday Copper and Chatham Rock 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 Chatham Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Chatham Rock.
Diversification Opportunities for Faraday Copper and Chatham Rock
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Faraday and Chatham is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Chatham Rock Phosphate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chatham Rock Phosphate 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 Chatham Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chatham Rock Phosphate has no effect on the direction of Faraday Copper i.e., Faraday Copper and Chatham Rock go up and down completely randomly.
Pair Corralation between Faraday Copper and Chatham Rock
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.21 times more return on investment than Chatham Rock. However, Faraday Copper Corp is 4.83 times less risky than Chatham Rock. It trades about 0.01 of its potential returns per unit of risk. Chatham Rock Phosphate is currently generating about -0.02 per unit of risk. If you would invest 90.00 in Faraday Copper Corp on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Faraday Copper Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Chatham Rock Phosphate
Performance |
| Timeline |
| Faraday Copper Corp |
| Chatham Rock Phosphate |
Faraday Copper and Chatham Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Chatham Rock
The main advantage of trading using opposite Faraday Copper and Chatham Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Chatham Rock 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 Chatham Rock will offset losses from the drop in Chatham Rock's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| Chatham Rock vs. First Majestic Silver | Chatham Rock vs. Ivanhoe Energy | Chatham Rock vs. Orezone Gold Corp | Chatham Rock 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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