Correlation Between Somero Enterprise and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both Somero Enterprise and Freeport McMoRan 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 Somero Enterprise and Freeport McMoRan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Somero Enterprise and Freeport McMoRan, you can compare the effects of market volatilities on Somero Enterprise and Freeport McMoRan 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 Somero Enterprise with a short position of Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Somero Enterprise and Freeport McMoRan.
Diversification Opportunities for Somero Enterprise and Freeport McMoRan
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Somero and Freeport is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Somero Enterprise and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan and Somero Enterprise 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 Somero Enterprise are associated (or correlated) with Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Somero Enterprise i.e., Somero Enterprise and Freeport McMoRan go up and down completely randomly.
Pair Corralation between Somero Enterprise and Freeport McMoRan
Assuming the 90 days trading horizon Somero Enterprise is expected to under-perform the Freeport McMoRan. But the stock apears to be less risky and, when comparing its historical volatility, Somero Enterprise is 1.04 times less risky than Freeport McMoRan. The stock trades about -0.01 of its potential returns per unit of risk. The Freeport McMoRan is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,150 in Freeport McMoRan on November 2, 2024 and sell it today you would lose (472.00) from holding Freeport McMoRan or give up 11.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Somero Enterprise vs. Freeport McMoRan
Performance |
| Timeline |
| Somero Enterprise |
| Freeport McMoRan |
Somero Enterprise and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Somero Enterprise and Freeport McMoRan
The main advantage of trading using opposite Somero Enterprise and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Somero Enterprise position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| Somero Enterprise vs. Atalaya Mining | Somero Enterprise vs. European Metals Holdings | Somero Enterprise vs. Wheaton Precious Metals | Somero Enterprise vs. Melia Hotels |
| Freeport McMoRan vs. MyHealthChecked Plc | Freeport McMoRan vs. CVS Health Corp | Freeport McMoRan vs. Check Point Software | Freeport McMoRan vs. International Biotechnology 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 CEOs Directory module to screen CEOs from public companies around the world.
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