Correlation Between Faraday Copper and Northwest Copper

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

Diversification Opportunities for Faraday Copper and Northwest Copper

-0.33

Correlation Coefficient

Faraday Copper  Northwest Copper

Very good diversification

The 3 months correlation between Faraday and Northwest is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Northwest Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Copper Corp 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 Northwest Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Copper Corp has no effect on the direction of Faraday Copper i.e., Faraday Copper and Northwest Copper go up and down completely randomly.

Pair Corralation between Faraday Copper and Northwest Copper

Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.41 times more return on investment than Northwest Copper. However, Faraday Copper Corp is 2.42 times less risky than Northwest Copper. It trades about 0.0 of its potential returns per unit of risk. Northwest Copper Corp is currently generating about -0.09 per unit of risk. If you would invest  78.00  in Faraday Copper Corp on September 12, 2024 and sell it today you would lose (1.00) from holding Faraday Copper Corp or give up 1.28% of portfolio value over 90 days.

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

Faraday Copper Corp  vs.  Northwest Copper Corp

Faraday Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Faraday Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Faraday Copper is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Northwest Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northwest Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Faraday Copper and Northwest Copper

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

The idea behind Faraday Copper Corp and Northwest Copper Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.