Correlation Between Faraday Copper and Dynacor Gold

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

Diversification Opportunities for Faraday Copper and Dynacor Gold

-0.67

Correlation Coefficient

Faraday Copper  Dynacor Gold

Excellent diversification

The 3 months correlation between Faraday and Dynacor is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines 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 Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Faraday Copper i.e., Faraday Copper and Dynacor Gold go up and down completely randomly.

Pair Corralation between Faraday Copper and Dynacor Gold

Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 1.22 times more return on investment than Dynacor Gold. However, Faraday Copper is 1.22 times more volatile than Dynacor Gold Mines. It trades about 0.07 of its potential returns per unit of risk. Dynacor Gold Mines is currently generating about -0.09 per unit of risk. If you would invest  75.00  in Faraday Copper Corp on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Faraday Copper Corp or generate 9.33% return on investment over 90 days.

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

Faraday Copper Corp  vs.  Dynacor Gold Mines

Faraday Copper Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Copper Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Faraday Copper may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dynacor Gold Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynacor Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Faraday Copper and Dynacor Gold

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

The idea behind Faraday Copper Corp and Dynacor Gold Mines 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.