Correlation Between Southern Copper and Hecla Mining
Can any of the company-specific risk be diversified away by investing in both Southern Copper and Hecla Mining 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 Hecla Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and Hecla Mining, you can compare the effects of market volatilities on Southern Copper and Hecla Mining 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 Hecla Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and Hecla Mining.
Diversification Opportunities for Southern Copper and Hecla Mining
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Southern and Hecla is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining 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 Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Southern Copper i.e., Southern Copper and Hecla Mining go up and down completely randomly.
Pair Corralation between Southern Copper and Hecla Mining
Given the investment horizon of 90 days Southern Copper is expected to generate 0.7 times more return on investment than Hecla Mining. However, Southern Copper is 1.44 times less risky than Hecla Mining. It trades about 0.26 of its potential returns per unit of risk. Hecla Mining is currently generating about 0.18 per unit of risk. If you would invest 8,121 in Southern Copper on February 7, 2024 and sell it today you would earn a total of 3,683 from holding Southern Copper or generate 45.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Southern Copper vs. Hecla Mining
Performance |
Timeline |
Southern Copper |
Hecla Mining |
Southern Copper and Hecla Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southern Copper and Hecla Mining
The main advantage of trading using opposite Southern Copper and Hecla Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper position performs unexpectedly, Hecla Mining 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 Hecla Mining will offset losses from the drop in Hecla Mining's long position.Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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