Correlation Between First Quantum and Ero Copper
Can any of the company-specific risk be diversified away by investing in both First Quantum and Ero 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 Ero 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 Ero Copper Corp, you can compare the effects of market volatilities on First Quantum and Ero 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 Ero Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Quantum and Ero Copper.
Diversification Opportunities for First Quantum and Ero Copper
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Ero is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Ero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ero Copper Corp 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 Ero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ero Copper Corp has no effect on the direction of First Quantum i.e., First Quantum and Ero Copper go up and down completely randomly.
Pair Corralation between First Quantum and Ero Copper
Assuming the 90 days horizon First Quantum Minerals is expected to generate 1.18 times more return on investment than Ero Copper. However, First Quantum is 1.18 times more volatile than Ero Copper Corp. It trades about 0.04 of its potential returns per unit of risk. Ero Copper Corp is currently generating about -0.16 per unit of risk. If you would invest 1,307 in First Quantum Minerals on August 25, 2024 and sell it today you would earn a total of 72.00 from holding First Quantum Minerals or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Quantum Minerals vs. Ero Copper Corp
Performance |
| Timeline |
| First Quantum Minerals |
| Ero Copper Corp |
First Quantum and Ero Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Quantum and Ero Copper
The main advantage of trading using opposite First Quantum and Ero Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Quantum position performs unexpectedly, Ero 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 Ero Copper will offset losses from the drop in Ero 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 |
| Ero Copper vs. Freeport McMoran Copper Gold | Ero Copper vs. Amerigo Resources | Ero Copper vs. Hudbay Minerals | Ero Copper vs. Capstone Copper 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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