Correlation Between Freeport McMoRan and Hyster-Yale Materials
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan and Hyster-Yale Materials 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 Freeport McMoRan and Hyster-Yale Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Hyster Yale Materials Handling, you can compare the effects of market volatilities on Freeport McMoRan and Hyster-Yale Materials 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 Freeport McMoRan with a short position of Hyster-Yale Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Hyster-Yale Materials.
Diversification Opportunities for Freeport McMoRan and Hyster-Yale Materials
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freeport and Hyster-Yale is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials and Freeport McMoRan 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 Freeport McMoRan are associated (or correlated) with Hyster-Yale Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Hyster-Yale Materials go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Hyster-Yale Materials
Assuming the 90 days trading horizon Freeport McMoRan is expected to under-perform the Hyster-Yale Materials. In addition to that, Freeport McMoRan is 1.11 times more volatile than Hyster Yale Materials Handling. It trades about -0.27 of its total potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about -0.14 per unit of volatility. If you would invest 5,100 in Hyster Yale Materials Handling on October 10, 2024 and sell it today you would lose (240.00) from holding Hyster Yale Materials Handling or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoRan vs. Hyster Yale Materials Handling
Performance |
| Timeline |
| Freeport McMoRan |
| Hyster Yale Materials |
Freeport McMoRan and Hyster-Yale Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Hyster-Yale Materials
The main advantage of trading using opposite Freeport McMoRan and Hyster-Yale Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan position performs unexpectedly, Hyster-Yale Materials 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 Hyster-Yale Materials will offset losses from the drop in Hyster-Yale Materials' long position.| Freeport McMoRan vs. SAFEROADS HLDGS | Freeport McMoRan vs. TRAINLINE PLC LS | Freeport McMoRan vs. CHINA SOUTHN AIR H | Freeport McMoRan vs. ALTAIR RES INC |
| Hyster-Yale Materials vs. TIANDE CHEMICAL | Hyster-Yale Materials vs. China BlueChemical | Hyster-Yale Materials vs. Fevertree Drinks PLC | Hyster-Yale Materials vs. BOSTON BEER A |
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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