Correlation Between Carpenter Technology and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology 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 Carpenter Technology and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carpenter Technology and Southern Copper, you can compare the effects of market volatilities on Carpenter Technology 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 Carpenter Technology with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Southern Copper.
Diversification Opportunities for Carpenter Technology and Southern Copper
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carpenter and Southern is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Carpenter Technology 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 Carpenter Technology 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 has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Southern Copper go up and down completely randomly.
Pair Corralation between Carpenter Technology and Southern Copper
Considering the 90-day investment horizon Carpenter Technology is expected to generate 1.28 times more return on investment than Southern Copper. However, Carpenter Technology is 1.28 times more volatile than Southern Copper. It trades about 0.37 of its potential returns per unit of risk. Southern Copper is currently generating about 0.21 per unit of risk. If you would invest 6,830 in Carpenter Technology on January 26, 2024 and sell it today you would earn a total of 1,210 from holding Carpenter Technology or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Carpenter Technology vs. Southern Copper
Performance |
| Timeline |
| Carpenter Technology |
| Southern Copper |
Carpenter Technology and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carpenter Technology and Southern Copper
The main advantage of trading using opposite Carpenter Technology and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology 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.| Carpenter Technology vs. Insteel Industries | Carpenter Technology vs. Mayville Engineering Co | Carpenter Technology vs. Gulf Island Fabrication | Carpenter Technology vs. ESAB Corp |
| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Taseko Mines | Southern Copper vs. Metals Acquisition Limited | Southern Copper vs. Hecla Mining |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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