Correlation Between Freeport McMoRan and Las Vegas

Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan and Las Vegas 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 Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Freeport McMoRan and Las Vegas Sands, you can compare the effects of market volatilities on Freeport McMoRan and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Las Vegas.

Diversification Opportunities for Freeport McMoRan and Las Vegas

-0.19

Correlation Coefficient

Freeport McMoRan  Las Vegas

Good diversification

The 3 months correlation between Freeport and Las is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Las Vegas go up and down completely randomly.

Pair Corralation between Freeport McMoRan and Las Vegas

Assuming the 90 days trading horizon Freeport McMoRan is expected to generate 1.12 times less return on investment than Las Vegas. In addition to that, Freeport McMoRan is 1.26 times more volatile than Las Vegas Sands. It trades about 0.01 of its total potential returns per unit of risk. Las Vegas Sands is currently generating about 0.02 per unit of volatility. If you would invest  4,788  in Las Vegas Sands on September 23, 2024 and sell it today you would earn a total of  423.00  from holding Las Vegas Sands or generate 8.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Freeport McMoRan  vs.  Las Vegas Sands

Freeport McMoRan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Las Vegas Sands

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Las Vegas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freeport McMoRan and Las Vegas

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

The idea behind Freeport McMoRan and Las Vegas Sands 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.