Correlation Between Southern Copper and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Carpenter Technology 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 Carpenter Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Carpenter Technology, you can compare the effects of market volatilities on Southern Copper and Carpenter Technology 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 Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Carpenter Technology.
Diversification Opportunities for Southern Copper and Carpenter Technology
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and Carpenter is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology 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 Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of Southern Copper i.e., Southern Copper and Carpenter Technology go up and down completely randomly.
Pair Corralation between Southern Copper and Carpenter Technology
Given the investment horizon of 90 days Southern Copper is expected to generate 1.31 times less return on investment than Carpenter Technology. But when comparing it to its historical volatility, Southern Copper is 1.17 times less risky than Carpenter Technology. It trades about 0.05 of its potential returns per unit of risk. Carpenter Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,911 in Carpenter Technology on December 29, 2023 and sell it today you would earn a total of 3,108 from holding Carpenter Technology or generate 79.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Southern Copper vs. Carpenter Technology
Performance |
Timeline |
Southern Copper |
Carpenter Technology |
Southern Copper and Carpenter Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southern Copper and Carpenter Technology
The main advantage of trading using opposite Southern Copper and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Carpenter Technology 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 Carpenter Technology will offset losses from the drop in Carpenter Technology's long position.Southern Copper vs. Chemours Co | Southern Copper vs. CF Industries Holdings | Southern Copper vs. Dupont De Nemours | Southern Copper vs. FutureFuel Corp |
Carpenter Technology vs. Tredegar | Carpenter Technology vs. CompoSecure | Carpenter Technology vs. ESAB Corp | Carpenter Technology vs. Northwest Pipe |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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