Correlation Between Freeport McMoran and Ero Copper
Can any of the company-specific risk be diversified away by investing in both Freeport McMoran and Ero 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 Freeport McMoran and Ero Copper 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 Ero Copper Corp, you can compare the effects of market volatilities on Freeport McMoran and Ero 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 Freeport McMoran with a short position of Ero Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoran and Ero Copper.
Diversification Opportunities for Freeport McMoran and Ero Copper
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Freeport and Ero is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold and Ero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ero Copper Corp 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 Ero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ero Copper Corp has no effect on the direction of Freeport McMoran i.e., Freeport McMoran and Ero Copper go up and down completely randomly.
Pair Corralation between Freeport McMoran and Ero Copper
Considering the 90-day investment horizon Freeport McMoran Copper Gold is expected to generate 0.75 times more return on investment than Ero Copper. However, Freeport McMoran Copper Gold is 1.34 times less risky than Ero Copper. It trades about 0.07 of its potential returns per unit of risk. Ero Copper Corp is currently generating about 0.01 per unit of risk. If you would invest 4,903 in Freeport McMoran Copper Gold on February 4, 2024 and sell it today you would earn a total of 142.00 from holding Freeport McMoran Copper Gold or generate 2.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Freeport McMoran Copper Gold vs. Ero Copper Corp
Performance |
Timeline |
Freeport McMoran Copper |
Ero Copper Corp |
Freeport McMoran and Ero Copper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freeport McMoran and Ero Copper
The main advantage of trading using opposite Freeport McMoran and Ero Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoran position performs unexpectedly, Ero 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 Ero Copper will offset losses from the drop in Ero Copper's long position.Freeport McMoran vs. Ero Copper Corp | Freeport McMoran vs. Taseko Mines | Freeport McMoran vs. Metals Acquisition Limited | Freeport McMoran vs. Vale SA ADR |
Ero Copper vs. Freeport McMoran Copper Gold | Ero Copper vs. Amerigo Resources | Ero Copper vs. Hudbay Minerals | Ero Copper vs. Capstone Copper Corp |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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