Correlation Between Hudbay Minerals and Freeport McMoran
Can any of the company-specific risk be diversified away by investing in both Hudbay Minerals 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 Hudbay Minerals and Freeport McMoran into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudbay Minerals and Freeport McMoran Copper Gold, you can compare the effects of market volatilities on Hudbay Minerals 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 Hudbay Minerals with a short position of Freeport McMoran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudbay Minerals and Freeport McMoran.
Diversification Opportunities for Hudbay Minerals and Freeport McMoran
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hudbay and Freeport is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hudbay Minerals and Freeport McMoran Copper Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoran Copper and Hudbay Minerals 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 Hudbay Minerals 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 Copper has no effect on the direction of Hudbay Minerals i.e., Hudbay Minerals and Freeport McMoran go up and down completely randomly.
Pair Corralation between Hudbay Minerals and Freeport McMoran
Considering the 90-day investment horizon Hudbay Minerals is expected to under-perform the Freeport McMoran. In addition to that, Hudbay Minerals is 1.58 times more volatile than Freeport McMoran Copper Gold. It trades about -0.07 of its total potential returns per unit of risk. Freeport McMoran Copper Gold is currently generating about -0.11 per unit of volatility. If you would invest 4,673 in Freeport McMoran Copper Gold on August 28, 2024 and sell it today you would lose (235.00) from holding Freeport McMoran Copper Gold or give up 5.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hudbay Minerals vs. Freeport McMoran Copper Gold
Performance |
| Timeline |
| Hudbay Minerals |
| Freeport McMoran Copper |
Hudbay Minerals and Freeport McMoran Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudbay Minerals and Freeport McMoran
The main advantage of trading using opposite Hudbay Minerals and Freeport McMoran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudbay Minerals 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.| Hudbay Minerals vs. Labrador Gold Corp | Hudbay Minerals vs. Aurion Resources | Hudbay Minerals vs. Puma Exploration | Hudbay Minerals vs. Golden Star Resource |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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