Correlation Between Falcon Energy and Metalero Mining

Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Metalero 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 Falcon Energy and Metalero Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcon Energy Materials and Metalero Mining Corp, you can compare the effects of market volatilities on Falcon Energy and Metalero 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 Falcon Energy with a short position of Metalero Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Metalero Mining.

Diversification Opportunities for Falcon Energy and Metalero Mining

-0.11

Correlation Coefficient

Falcon Energy  Metalero Mining

Good diversification

The 3 months correlation between Falcon and Metalero is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Metalero Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalero Mining Corp and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Metalero Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalero Mining Corp has no effect on the direction of Falcon Energy i.e., Falcon Energy and Metalero Mining go up and down completely randomly.

Pair Corralation between Falcon Energy and Metalero Mining

Assuming the 90 days trading horizon Falcon Energy Materials is expected to generate 1.86 times more return on investment than Metalero Mining. However, Falcon Energy is 1.86 times more volatile than Metalero Mining Corp. It trades about 0.24 of its potential returns per unit of risk. Metalero Mining Corp is currently generating about -0.12 per unit of risk. If you would invest  68.00  in Falcon Energy Materials on September 1, 2024 and sell it today you would earn a total of  17.00  from holding Falcon Energy Materials or generate 25.0% return on investment over 90 days.

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

Falcon Energy Materials  vs.  Metalero Mining Corp

Falcon Energy Materials

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Energy Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Falcon Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Metalero Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalero Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Metalero Mining is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Falcon Energy and Metalero Mining

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

The idea behind Falcon Energy Materials and Metalero Mining 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.