Correlation Between FREEPORT and Enersys

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

By analyzing existing cross correlation between FREEPORT MCMORAN INC 4375 and Enersys, you can compare the effects of market volatilities on FREEPORT and Enersys 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 FREEPORT with a short position of Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREEPORT and Enersys.

Diversification Opportunities for FREEPORT and Enersys

0.52

Correlation Coefficient

FREEPORT  Enersys

Very weak diversification

The 3 months correlation between FREEPORT and Enersys is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FREEPORT MCMORAN INC 4375 and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and FREEPORT 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 FREEPORT MCMORAN INC 4375 are associated (or correlated) with Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of FREEPORT i.e., FREEPORT and Enersys go up and down completely randomly.

Pair Corralation between FREEPORT and Enersys

Assuming the 90 days trading horizon FREEPORT MCMORAN INC 4375 is expected to generate 0.71 times more return on investment than Enersys. However, FREEPORT MCMORAN INC 4375 is 1.41 times less risky than Enersys. It trades about -0.26 of its potential returns per unit of risk. Enersys is currently generating about -0.27 per unit of risk. If you would invest  9,809  in FREEPORT MCMORAN INC 4375 on September 25, 2024 and sell it today you would lose (491.00) from holding FREEPORT MCMORAN INC 4375 or give up 5.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

FREEPORT MCMORAN INC 4375  vs.  Enersys

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 4375 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with FREEPORT and Enersys

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

The idea behind FREEPORT MCMORAN INC 4375 and Enersys 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.