Correlation Between Marimaca Copper and Faction Investment
Can any of the company-specific risk be diversified away by investing in both Marimaca Copper and Faction Investment 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 Faction Investment 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 Faction Investment Group, you can compare the effects of market volatilities on Marimaca Copper and Faction Investment 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 Faction Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marimaca Copper and Faction Investment.
Diversification Opportunities for Marimaca Copper and Faction Investment
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Marimaca and Faction is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Marimaca Copper Corp and Faction Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faction Investment 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 Faction Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faction Investment has no effect on the direction of Marimaca Copper i.e., Marimaca Copper and Faction Investment go up and down completely randomly.
Pair Corralation between Marimaca Copper and Faction Investment
Assuming the 90 days trading horizon Marimaca Copper is expected to generate 10.28 times less return on investment than Faction Investment. But when comparing it to its historical volatility, Marimaca Copper Corp is 8.6 times less risky than Faction Investment. It trades about 0.09 of its potential returns per unit of risk. Faction Investment Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Faction Investment Group on December 1, 2024 and sell it today you would earn a total of 3.50 from holding Faction Investment Group or generate 233.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marimaca Copper Corp vs. Faction Investment Group
Performance |
| Timeline |
| Marimaca Copper Corp |
| Faction Investment |
Marimaca Copper and Faction Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marimaca Copper and Faction Investment
The main advantage of trading using opposite Marimaca Copper and Faction Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marimaca Copper position performs unexpectedly, Faction Investment 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 Faction Investment will offset losses from the drop in Faction Investment's long position.| Marimaca Copper vs. Ero Copper Corp | Marimaca Copper vs. Arizona Sonoran Copper | Marimaca Copper vs. Solaris Resources |
| Faction Investment vs. Intact Financial Corp | Faction Investment vs. Sun Life Financial | Faction Investment vs. Data Communications Management | Faction Investment vs. Eskay Mining 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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