Correlation Between Spirent Communications and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Southern 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 Spirent Communications and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Southern Copper Corp, you can compare the effects of market volatilities on Spirent Communications and Southern 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 Spirent Communications with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Southern Copper.
Diversification Opportunities for Spirent Communications and Southern Copper
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and Southern is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of Spirent Communications i.e., Spirent Communications and Southern Copper go up and down completely randomly.
Pair Corralation between Spirent Communications and Southern Copper
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.48 times more return on investment than Southern Copper. However, Spirent Communications plc is 2.07 times less risky than Southern Copper. It trades about 0.05 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.22 per unit of risk. If you would invest 17,300 in Spirent Communications plc on September 22, 2024 and sell it today you would earn a total of 350.00 from holding Spirent Communications plc or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Southern Copper Corp
Performance |
| Timeline |
| Spirent Communications |
| Southern Copper Corp |
Spirent Communications and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Southern Copper
The main advantage of trading using opposite Spirent Communications and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Southern 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Spirent Communications vs. Hochschild Mining plc | Spirent Communications vs. GoldMining | Spirent Communications vs. European Metals Holdings | Spirent Communications vs. Bloomsbury Publishing Plc |
| Southern Copper vs. Primary Health Properties | Southern Copper vs. Inspiration Healthcare Group | Southern Copper vs. Griffin Mining | Southern Copper vs. Spire Healthcare Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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