Correlation Between Southern Copper and United States
Can any of the company-specific risk be diversified away by investing in both Southern Copper and United States 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 Southern Copper and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and United States Steel, you can compare the effects of market volatilities on Southern Copper and United States 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 Southern Copper with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and United States.
Diversification Opportunities for Southern Copper and United States
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Southern and United is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Southern 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 Southern Copper are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Southern Copper i.e., Southern Copper and United States go up and down completely randomly.
Pair Corralation between Southern Copper and United States
Assuming the 90 days trading horizon Southern Copper is expected to under-perform the United States. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper is 2.45 times less risky than United States. The stock trades about -0.2 of its potential returns per unit of risk. The United States Steel is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 76,568 in United States Steel on August 28, 2024 and sell it today you would earn a total of 8,212 from holding United States Steel or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper vs. United States Steel
Performance |
| Timeline |
| Southern Copper |
| United States Steel |
Southern Copper and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and United States
The main advantage of trading using opposite Southern Copper and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Southern Copper vs. Prudential Financial | Southern Copper vs. Verizon Communications | Southern Copper vs. Ross Stores | Southern Copper vs. McEwen Mining |
| United States vs. The Select Sector | United States vs. Promotora y Operadora | United States vs. iShares Global Timber | United States vs. SPDR Series Trust |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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