Correlation Between Freeport McMoran and Cb Large
Can any of the company-specific risk be diversified away by investing in both Freeport McMoran and Cb Large 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 Freeport McMoran and Cb Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoran Copper Gold and Cb Large Cap, you can compare the effects of market volatilities on Freeport McMoran and Cb Large 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 Freeport McMoran with a short position of Cb Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoran and Cb Large.
Diversification Opportunities for Freeport McMoran and Cb Large
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freeport and CBLSX is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold and Cb Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cb Large Cap and Freeport McMoran 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 Freeport McMoran Copper Gold are associated (or correlated) with Cb Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cb Large Cap has no effect on the direction of Freeport McMoran i.e., Freeport McMoran and Cb Large go up and down completely randomly.
Pair Corralation between Freeport McMoran and Cb Large
Considering the 90-day investment horizon Freeport McMoran Copper Gold is expected to generate 3.69 times more return on investment than Cb Large. However, Freeport McMoran is 3.69 times more volatile than Cb Large Cap. It trades about 0.19 of its potential returns per unit of risk. Cb Large Cap is currently generating about 0.12 per unit of risk. If you would invest 3,803 in Freeport McMoran Copper Gold on March 6, 2024 and sell it today you would earn a total of 1,167 from holding Freeport McMoran Copper Gold or generate 30.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Freeport McMoran Copper Gold vs. Cb Large Cap
Performance |
Timeline |
Freeport McMoran Copper |
Cb Large Cap |
Freeport McMoran and Cb Large Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freeport McMoran and Cb Large
The main advantage of trading using opposite Freeport McMoran and Cb Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoran position performs unexpectedly, Cb Large 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 Cb Large will offset losses from the drop in Cb Large's long position.Freeport McMoran vs. Ivanhoe Electric | Freeport McMoran vs. Ero Copper Corp | Freeport McMoran vs. Hudbay Minerals | Freeport McMoran vs. Taseko Mines |
Cb Large vs. Vanguard Value Index | Cb Large vs. Dodge Cox Stock | Cb Large vs. American Mutual Fund | Cb Large vs. American Mutual Fund |
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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