Correlation Between Freeport McMoRan and Uniper SE

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

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

Diversification Opportunities for Freeport McMoRan and Uniper SE

0.9

Correlation Coefficient

Freeport McMoRan  Uniper SE

Almost no diversification

The 3 months correlation between Freeport and Uniper is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE 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 Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Uniper SE go up and down completely randomly.

Pair Corralation between Freeport McMoRan and Uniper SE

Assuming the 90 days trading horizon Freeport McMoRan is expected to under-perform the Uniper SE. In addition to that, Freeport McMoRan is 1.03 times more volatile than Uniper SE. It trades about -0.24 of its total potential returns per unit of risk. Uniper SE is currently generating about -0.11 per unit of volatility. If you would invest  4,168  in Uniper SE on September 23, 2024 and sell it today you would lose (213.00) from holding Uniper SE or give up 5.11% of portfolio value over 90 days.

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

Freeport McMoRan  vs.  Uniper SE

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.

Uniper SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uniper SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Freeport McMoRan and Uniper SE

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

The idea behind Freeport McMoRan and Uniper SE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.