Correlation Between Faraday Copper and First Mining

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

Diversification Opportunities for Faraday Copper and First Mining

0.48

Correlation Coefficient

Faraday Copper  First Mining

Very weak diversification

The 3 months correlation between Faraday and First is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of Faraday Copper i.e., Faraday Copper and First Mining go up and down completely randomly.

Pair Corralation between Faraday Copper and First Mining

Assuming the 90 days trading horizon Faraday Copper is expected to generate 1.8 times less return on investment than First Mining. But when comparing it to its historical volatility, Faraday Copper Corp is 1.46 times less risky than First Mining. It trades about 0.07 of its potential returns per unit of risk. First Mining Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12.00  in First Mining Gold on December 29, 2024 and sell it today you would earn a total of  2.00  from holding First Mining Gold or generate 16.67% return on investment over 90 days.

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

Faraday Copper Corp  vs.  First Mining Gold

Faraday Copper Corp

Risk-Adjusted Performance

OK

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.

First Mining Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Mining Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, First Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faraday Copper and First Mining

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

The idea behind Faraday Copper Corp and First Mining Gold 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.