Correlation Between First Quantum and Bell Copper
Can any of the company-specific risk be diversified away by investing in both First Quantum and Bell Copper 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 First Quantum and Bell Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Quantum Minerals and Bell Copper, you can compare the effects of market volatilities on First Quantum and Bell Copper 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 First Quantum with a short position of Bell Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Quantum and Bell Copper.
Diversification Opportunities for First Quantum and Bell Copper
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Bell is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Bell Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Copper and First Quantum 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 First Quantum Minerals are associated (or correlated) with Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper has no effect on the direction of First Quantum i.e., First Quantum and Bell Copper go up and down completely randomly.
Pair Corralation between First Quantum and Bell Copper
Assuming the 90 days horizon First Quantum Minerals is expected to under-perform the Bell Copper. But the pink sheet apears to be less risky and, when comparing its historical volatility, First Quantum Minerals is 2.64 times less risky than Bell Copper. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Bell Copper is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Bell Copper on August 29, 2024 and sell it today you would lose (7.89) from holding Bell Copper or give up 71.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Quantum Minerals vs. Bell Copper
Performance |
| Timeline |
| First Quantum Minerals |
| Bell Copper |
First Quantum and Bell Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Quantum and Bell Copper
The main advantage of trading using opposite First Quantum and Bell Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Quantum position performs unexpectedly, Bell Copper 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 Bell Copper will offset losses from the drop in Bell Copper's long position.| First Quantum vs. Amerigo Resources | First Quantum vs. Antofagasta PLC | First Quantum vs. Capstone Copper Corp | First Quantum vs. Copper Mountain Mining |
| Bell Copper vs. Arizona Sonoran Copper | Bell Copper vs. Dor Copper Mining | Bell Copper vs. CopperCorp Resources | Bell Copper vs. Copper Fox Metals |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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