Correlation Between Faraday Copper and Rock Tech
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Rock Tech 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 Rock Tech 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 Rock Tech Lithium, you can compare the effects of market volatilities on Faraday Copper and Rock Tech 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 Rock Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Rock Tech.
Diversification Opportunities for Faraday Copper and Rock Tech
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Faraday and Rock is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Rock Tech Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Tech Lithium 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 Rock Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Tech Lithium has no effect on the direction of Faraday Copper i.e., Faraday Copper and Rock Tech go up and down completely randomly.
Pair Corralation between Faraday Copper and Rock Tech
Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.61 times more return on investment than Rock Tech. However, Faraday Copper Corp is 1.63 times less risky than Rock Tech. It trades about -0.16 of its potential returns per unit of risk. Rock Tech Lithium is currently generating about -0.22 per unit of risk. If you would invest 90.00 in Faraday Copper Corp on September 1, 2024 and sell it today you would lose (7.00) from holding Faraday Copper Corp or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. Rock Tech Lithium
Performance |
| Timeline |
| Faraday Copper Corp |
| Rock Tech Lithium |
Faraday Copper and Rock Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Rock Tech
The main advantage of trading using opposite Faraday Copper and Rock Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Rock Tech 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 Rock Tech will offset losses from the drop in Rock Tech's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| Rock Tech vs. American Lithium Corp | Rock Tech vs. Pure Energy Minerals | Rock Tech vs. Frontier Lithium | Rock Tech vs. Wealth Minerals |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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