Correlation Between Alphabet and First Quantum

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

By analyzing existing cross correlation between Alphabet Inc CDR and First Quantum Minerals, you can compare the effects of market volatilities on Alphabet and First Quantum 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 Alphabet with a short position of First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and First Quantum.

Diversification Opportunities for Alphabet and First Quantum

-0.24

Correlation Coefficient

Alphabet  First Quantum

Very good diversification

The 3 months correlation between Alphabet and First is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc CDR and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals and Alphabet 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 Alphabet Inc CDR are associated (or correlated) with First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Alphabet i.e., Alphabet and First Quantum go up and down completely randomly.

Pair Corralation between Alphabet and First Quantum

Assuming the 90 days trading horizon Alphabet Inc CDR is expected to under-perform the First Quantum. But the stock apears to be less risky and, when comparing its historical volatility, Alphabet Inc CDR is 1.75 times less risky than First Quantum. The stock trades about -0.14 of its potential returns per unit of risk. The First Quantum Minerals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,864  in First Quantum Minerals on December 30, 2024 and sell it today you would earn a total of  115.00  from holding First Quantum Minerals or generate 6.17% return on investment over 90 days.

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

Alphabet Inc CDR  vs.  First Quantum Minerals

Alphabet CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

First Quantum Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Quantum may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alphabet and First Quantum

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

The idea behind Alphabet Inc CDR and First Quantum Minerals 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.