Correlation Between Southern Copper and Select Sector
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Select Sector 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 Select Sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and The Select Sector, you can compare the effects of market volatilities on Southern Copper and Select Sector 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 Select Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Select Sector.
Diversification Opportunities for Southern Copper and Select Sector
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and Select is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and The Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Sector 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 Select Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Sector has no effect on the direction of Southern Copper i.e., Southern Copper and Select Sector go up and down completely randomly.
Pair Corralation between Southern Copper and Select Sector
Assuming the 90 days trading horizon Southern Copper is expected to under-perform the Select Sector. But the stock apears to be less risky and, when comparing its historical volatility, Southern Copper is 1.17 times less risky than Select Sector. The stock trades about -0.2 of its potential returns per unit of risk. The The Select Sector is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 159,900 in The Select Sector on August 30, 2024 and sell it today you would earn a total of 10,700 from holding The Select Sector or generate 6.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Southern Copper vs. The Select Sector
Performance |
Timeline |
Southern Copper |
Select Sector |
Southern Copper and Select Sector Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southern Copper and Select Sector
The main advantage of trading using opposite Southern Copper and Select Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Select Sector 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 Select Sector will offset losses from the drop in Select Sector's long position.Southern Copper vs. Freeport McMoRan | Southern Copper vs. Apple Inc | Southern Copper vs. Netflix | Southern Copper vs. The Walt Disney |
Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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