Correlation Between Faraday Copper and Stellar AfricaGold
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Stellar AfricaGold 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 Stellar AfricaGold 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 Stellar AfricaGold, you can compare the effects of market volatilities on Faraday Copper and Stellar AfricaGold 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 Stellar AfricaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Stellar AfricaGold.
Diversification Opportunities for Faraday Copper and Stellar AfricaGold
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and Stellar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Stellar AfricaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar AfricaGold 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 Stellar AfricaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar AfricaGold has no effect on the direction of Faraday Copper i.e., Faraday Copper and Stellar AfricaGold go up and down completely randomly.
Pair Corralation between Faraday Copper and Stellar AfricaGold
Assuming the 90 days trading horizon Faraday Copper is expected to generate 4.19 times less return on investment than Stellar AfricaGold. But when comparing it to its historical volatility, Faraday Copper Corp is 4.22 times less risky than Stellar AfricaGold. It trades about 0.04 of its potential returns per unit of risk. Stellar AfricaGold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Stellar AfricaGold on August 30, 2024 and sell it today you would lose (31.00) from holding Stellar AfricaGold or give up 77.5% 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. Stellar AfricaGold
Performance |
| Timeline |
| Faraday Copper Corp |
| Stellar AfricaGold |
Faraday Copper and Stellar AfricaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and Stellar AfricaGold
The main advantage of trading using opposite Faraday Copper and Stellar AfricaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Stellar AfricaGold 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 Stellar AfricaGold will offset losses from the drop in Stellar AfricaGold's long position.| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
| Stellar AfricaGold vs. Richmond Minerals | Stellar AfricaGold vs. Societe d Exploration | Stellar AfricaGold vs. Tesoro Minerals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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