Correlation Between Marimaca Copper and Faraday Copper
Can any of the company-specific risk be diversified away by investing in both Marimaca Copper and Faraday 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 Marimaca Copper and Faraday Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marimaca Copper Corp and Faraday Copper Corp, you can compare the effects of market volatilities on Marimaca Copper and Faraday 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 Marimaca Copper with a short position of Faraday Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimaca Copper and Faraday Copper.
Diversification Opportunities for Marimaca Copper and Faraday Copper
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marimaca and Faraday is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Marimaca Copper Corp and Faraday Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Copper Corp and Marimaca Copper 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 Marimaca Copper Corp are associated (or correlated) with Faraday Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Copper Corp has no effect on the direction of Marimaca Copper i.e., Marimaca Copper and Faraday Copper go up and down completely randomly.
Pair Corralation between Marimaca Copper and Faraday Copper
Assuming the 90 days trading horizon Marimaca Copper Corp is expected to generate 2.13 times more return on investment than Faraday Copper. However, Marimaca Copper is 2.13 times more volatile than Faraday Copper Corp. It trades about 0.16 of its potential returns per unit of risk. Faraday Copper Corp is currently generating about 0.01 per unit of risk. If you would invest 425.00 in Marimaca Copper Corp on August 27, 2024 and sell it today you would earn a total of 56.00 from holding Marimaca Copper Corp or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marimaca Copper Corp vs. Faraday Copper Corp
Performance |
| Timeline |
| Marimaca Copper Corp |
| Faraday Copper Corp |
Marimaca Copper and Faraday Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marimaca Copper and Faraday Copper
The main advantage of trading using opposite Marimaca Copper and Faraday Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marimaca Copper position performs unexpectedly, Faraday 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 Faraday Copper will offset losses from the drop in Faraday Copper's long position.| Marimaca Copper vs. Ero Copper Corp | Marimaca Copper vs. Dore Copper Mining | Marimaca Copper vs. QC Copper and | Marimaca Copper vs. Arizona Sonoran Copper |
| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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