Correlation Between Various Eateries and Freeport McMoRan

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

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

Diversification Opportunities for Various Eateries and Freeport McMoRan

0.22

Correlation Coefficient

Various Eateries  Freeport McMoRan

Modest diversification

The 3 months correlation between Various and Freeport is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Various Eateries PLC and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan and Various Eateries 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 Various Eateries PLC 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 Various Eateries i.e., Various Eateries and Freeport McMoRan go up and down completely randomly.

Pair Corralation between Various Eateries and Freeport McMoRan

Assuming the 90 days trading horizon Various Eateries PLC is expected to under-perform the Freeport McMoRan. But the stock apears to be less risky and, when comparing its historical volatility, Various Eateries PLC is 2.93 times less risky than Freeport McMoRan. The stock trades about -0.25 of its potential returns per unit of risk. The Freeport McMoRan is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,934  in Freeport McMoRan on December 24, 2024 and sell it today you would earn a total of  294.00  from holding Freeport McMoRan or generate 7.47% return on investment over 90 days.

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

Various Eateries PLC  vs.  Freeport McMoRan

Various Eateries PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Various Eateries PLC 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Freeport McMoRan

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Freeport McMoRan are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Freeport McMoRan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Various Eateries and Freeport McMoRan

The main advantage of trading using opposite Various Eateries and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Various Eateries 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 Various Eateries PLC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.