Correlation Between Rand Capital and Freeport

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

By analyzing existing cross correlation between Rand Capital Corp and Freeport McMoRan 425 percent, you can compare the effects of market volatilities on Rand Capital and Freeport 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 Rand Capital with a short position of Freeport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and Freeport.

Diversification Opportunities for Rand Capital and Freeport

-0.55

Correlation Coefficient

Rand Capital  Freeport

Excellent diversification

The 3 months correlation between Rand and Freeport is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Freeport McMoRan 425 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 425 and Rand Capital 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 Rand Capital Corp are associated (or correlated) with Freeport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan 425 has no effect on the direction of Rand Capital i.e., Rand Capital and Freeport go up and down completely randomly.

Pair Corralation between Rand Capital and Freeport

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 5.61 times more return on investment than Freeport. However, Rand Capital is 5.61 times more volatile than Freeport McMoRan 425 percent. It trades about 0.06 of its potential returns per unit of risk. Freeport McMoRan 425 percent is currently generating about 0.01 per unit of risk. If you would invest  977.00  in Rand Capital Corp on October 23, 2024 and sell it today you would earn a total of  1,191  from holding Rand Capital Corp or generate 121.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.37%
Values	Daily Returns

Rand Capital Corp  vs.  Freeport McMoRan 425 percent

Rand Capital Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Freeport McMoRan 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 425 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rand Capital and Freeport

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

The idea behind Rand Capital Corp and Freeport McMoRan 425 percent 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.