Correlation Between Faraday Copper and Inventus Mining

Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Inventus 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 Faraday Copper and Inventus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Faraday Copper Corp and Inventus Mining Corp, you can compare the effects of market volatilities on Faraday Copper and Inventus 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 Faraday Copper with a short position of Inventus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Inventus Mining.

Diversification Opportunities for Faraday Copper and Inventus Mining

-0.3

Correlation Coefficient

Faraday Copper  Inventus Mining

Very good diversification

The 3 months correlation between Faraday and Inventus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Inventus Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventus Mining Corp and Faraday 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 Faraday Copper Corp are associated (or correlated) with Inventus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventus Mining Corp has no effect on the direction of Faraday Copper i.e., Faraday Copper and Inventus Mining go up and down completely randomly.

Pair Corralation between Faraday Copper and Inventus Mining

Assuming the 90 days trading horizon Faraday Copper is expected to generate 592.09 times less return on investment than Inventus Mining. But when comparing it to its historical volatility, Faraday Copper Corp is 6.5 times less risky than Inventus Mining. It trades about 0.0 of its potential returns per unit of risk. Inventus Mining Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Inventus Mining Corp on September 12, 2024 and sell it today you would earn a total of  4.00  from holding Inventus Mining Corp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Faraday Copper Corp  vs.  Inventus Mining Corp

Faraday Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Faraday Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Faraday Copper is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Inventus Mining Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inventus Mining Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Inventus Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faraday Copper and Inventus Mining

The main advantage of trading using opposite Faraday Copper and Inventus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, Inventus 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 Inventus Mining will offset losses from the drop in Inventus Mining's long position.

The idea behind Faraday Copper Corp and Inventus Mining Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 .