Correlation Between GSTechnologies and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both GSTechnologies and Freeport McMoRan 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 GSTechnologies and Freeport McMoRan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GSTechnologies and Freeport McMoRan, you can compare the effects of market volatilities on GSTechnologies and Freeport McMoRan 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 GSTechnologies with a short position of Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSTechnologies and Freeport McMoRan.
Diversification Opportunities for GSTechnologies and Freeport McMoRan
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GSTechnologies and Freeport is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding GSTechnologies and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan and GSTechnologies 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 GSTechnologies are associated (or correlated) with Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of GSTechnologies i.e., GSTechnologies and Freeport McMoRan go up and down completely randomly.
Pair Corralation between GSTechnologies and Freeport McMoRan
Assuming the 90 days trading horizon GSTechnologies is expected to generate 3.72 times more return on investment than Freeport McMoRan. However, GSTechnologies is 3.72 times more volatile than Freeport McMoRan. It trades about 0.06 of its potential returns per unit of risk. Freeport McMoRan is currently generating about 0.01 per unit of risk. If you would invest 71.00 in GSTechnologies on September 23, 2024 and sell it today you would earn a total of 107.00 from holding GSTechnologies or generate 150.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GSTechnologies vs. Freeport McMoRan
Performance |
| Timeline |
| GSTechnologies |
| Freeport McMoRan |
GSTechnologies and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GSTechnologies and Freeport McMoRan
The main advantage of trading using opposite GSTechnologies and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSTechnologies position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| GSTechnologies vs. Samsung Electronics Co | GSTechnologies vs. Samsung Electronics Co | GSTechnologies vs. Hyundai Motor | GSTechnologies vs. Toyota Motor Corp |
| Freeport McMoRan vs. Uniper SE | Freeport McMoRan vs. Mulberry Group PLC | Freeport McMoRan vs. London Security Plc | Freeport McMoRan vs. Triad Group PLC |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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