Correlation Between Cleanaway Waste and Freeport McMoRan

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

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

Diversification Opportunities for Cleanaway Waste and Freeport McMoRan

0.64

Correlation Coefficient

Cleanaway Waste  Freeport McMoRan

Poor diversification

The 3 months correlation between Cleanaway and Freeport is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan and Cleanaway Waste 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 Cleanaway Waste Management are associated (or correlated) with Freeport McMoRan. 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 has no effect on the direction of Cleanaway Waste i.e., Cleanaway Waste and Freeport McMoRan go up and down completely randomly.

Pair Corralation between Cleanaway Waste and Freeport McMoRan

Assuming the 90 days trading horizon Cleanaway Waste is expected to generate 1.18 times less return on investment than Freeport McMoRan. But when comparing it to its historical volatility, Cleanaway Waste Management is 1.2 times less risky than Freeport McMoRan. It trades about 0.02 of its potential returns per unit of risk. Freeport McMoRan is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,567  in Freeport McMoRan on September 26, 2024 and sell it today you would earn a total of  186.00  from holding Freeport McMoRan or generate 5.21% return on investment over 90 days.

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

Cleanaway Waste Management  vs.  Freeport McMoRan

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cleanaway Waste is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Freeport McMoRan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cleanaway Waste and Freeport McMoRan

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

The idea behind Cleanaway Waste Management and Freeport McMoRan 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.