Correlation Between MAS Gold and Faraday Copper
Can any of the company-specific risk be diversified away by investing in both MAS Gold 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 MAS Gold and Faraday Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAS Gold Corp and Faraday Copper Corp, you can compare the effects of market volatilities on MAS Gold 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 MAS Gold with a short position of Faraday Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAS Gold and Faraday Copper.
Diversification Opportunities for MAS Gold and Faraday Copper
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MAS and Faraday is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MAS Gold 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 MAS Gold 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 MAS Gold 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 MAS Gold i.e., MAS Gold and Faraday Copper go up and down completely randomly.
Pair Corralation between MAS Gold and Faraday Copper
Assuming the 90 days horizon MAS Gold Corp is expected to generate 16.06 times more return on investment than Faraday Copper. However, MAS Gold is 16.06 times more volatile than Faraday Copper Corp. It trades about 0.06 of its potential returns per unit of risk. Faraday Copper Corp is currently generating about -0.26 per unit of risk. If you would invest 2.00 in MAS Gold Corp on September 25, 2024 and sell it today you would lose (1.00) from holding MAS Gold Corp or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAS Gold Corp vs. Faraday Copper Corp
Performance |
| Timeline |
| MAS Gold Corp |
| Faraday Copper Corp |
MAS Gold and Faraday Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAS Gold and Faraday Copper
The main advantage of trading using opposite MAS Gold and Faraday Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAS Gold 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.| MAS Gold vs. Wildsky Resources | MAS Gold vs. Q Gold Resources | MAS Gold vs. Plato Gold Corp | MAS Gold vs. Goldbank Mining Corp |
| Faraday Copper vs. Wildsky Resources | Faraday Copper vs. Q Gold Resources | Faraday Copper vs. Plato Gold Corp | Faraday Copper vs. MAS Gold 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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