Correlation Between Ero Copper and Amerigo Resources

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

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

Diversification Opportunities for Ero Copper and Amerigo Resources

0.43

Correlation Coefficient

Ero Copper  Amerigo Resources

Very weak diversification

The 3 months correlation between Ero and Amerigo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp and Amerigo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerigo Resources and Ero 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 Ero Copper Corp are associated (or correlated) with Amerigo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerigo Resources has no effect on the direction of Ero Copper i.e., Ero Copper and Amerigo Resources go up and down completely randomly.

Pair Corralation between Ero Copper and Amerigo Resources

Considering the 90-day investment horizon Ero Copper Corp is expected to under-perform the Amerigo Resources. In addition to that, Ero Copper is 1.26 times more volatile than Amerigo Resources. It trades about -0.11 of its total potential returns per unit of risk. Amerigo Resources is currently generating about 0.05 per unit of volatility. If you would invest  115.00  in Amerigo Resources on September 2, 2024 and sell it today you would earn a total of  7.00  from holding Amerigo Resources or generate 6.09% return on investment over 90 days.

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

Ero Copper Corp  vs.  Amerigo Resources

Ero Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ero Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Amerigo Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amerigo Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Amerigo Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ero Copper and Amerigo Resources

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

The idea behind Ero Copper Corp and Amerigo Resources 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.