Correlation Between Faraday Copper and Santacruz Silv

Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Santacruz Silv 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 Santacruz Silv 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 Santacruz Silv, you can compare the effects of market volatilities on Faraday Copper and Santacruz Silv 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 Santacruz Silv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Santacruz Silv.

Diversification Opportunities for Faraday Copper and Santacruz Silv

0.39

Correlation Coefficient

Faraday Copper  Santacruz Silv

Weak diversification

The 3 months correlation between Faraday and Santacruz is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Santacruz Silv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santacruz Silv 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 Santacruz Silv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santacruz Silv has no effect on the direction of Faraday Copper i.e., Faraday Copper and Santacruz Silv go up and down completely randomly.

Pair Corralation between Faraday Copper and Santacruz Silv

Assuming the 90 days trading horizon Faraday Copper Corp is expected to under-perform the Santacruz Silv. But the stock apears to be less risky and, when comparing its historical volatility, Faraday Copper Corp is 2.41 times less risky than Santacruz Silv. The stock trades about -0.37 of its potential returns per unit of risk. The Santacruz Silv is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Santacruz Silv on September 8, 2024 and sell it today you would lose (8.00) from holding Santacruz Silv or give up 21.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Faraday Copper Corp  vs.  Santacruz Silv

Faraday Copper Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Copper Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Faraday Copper is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Santacruz Silv

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Santacruz Silv are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Santacruz Silv showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faraday Copper and Santacruz Silv

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

The idea behind Faraday Copper Corp and Santacruz Silv 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.