Correlation Between Faraday Copper and Platinum Group
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Platinum Group 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 Platinum Group 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 Platinum Group Metals, you can compare the effects of market volatilities on Faraday Copper and Platinum Group 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 Platinum Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Platinum Group.
Diversification Opportunities for Faraday Copper and Platinum Group
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Faraday and Platinum is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group 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 Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Faraday Copper i.e., Faraday Copper and Platinum Group go up and down completely randomly.
Pair Corralation between Faraday Copper and Platinum Group
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.9 times more return on investment than Platinum Group. However, Faraday Copper Corp is 1.12 times less risky than Platinum Group. It trades about 0.04 of its potential returns per unit of risk. Platinum Group Metals is currently generating about 0.02 per unit of risk. If you would invest 57.00 in Faraday Copper Corp on August 25, 2024 and sell it today you would earn a total of 33.00 from holding Faraday Copper Corp or generate 57.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Platinum Group Metals
Performance |
| Timeline |
| Faraday Copper Corp |
| Platinum Group Metals |
Faraday Copper and Platinum Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Platinum Group
The main advantage of trading using opposite Faraday Copper and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Platinum Group 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 Platinum Group will offset losses from the drop in Platinum Group's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| Platinum Group vs. Eastern Platinum Limited | Platinum Group vs. Entree Resources | Platinum Group vs. Solitario Exploration Royalty | Platinum Group vs. Minco Silver |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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