Correlation Between Valens and FREEPORT

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

By analyzing existing cross correlation between Valens and FREEPORT MCMORAN INC 4625, you can compare the effects of market volatilities on Valens 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 Valens with a short position of FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and FREEPORT.

Diversification Opportunities for Valens and FREEPORT

0.18

Correlation Coefficient

Valens  FREEPORT

Average diversification

The 3 months correlation between Valens and FREEPORT is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Valens and FREEPORT MCMORAN INC 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN INC and Valens 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 Valens 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 INC has no effect on the direction of Valens i.e., Valens and FREEPORT go up and down completely randomly.

Pair Corralation between Valens and FREEPORT

Considering the 90-day investment horizon Valens is expected to generate 5.76 times more return on investment than FREEPORT. However, Valens is 5.76 times more volatile than FREEPORT MCMORAN INC 4625. It trades about 0.12 of its potential returns per unit of risk. FREEPORT MCMORAN INC 4625 is currently generating about -0.08 per unit of risk. If you would invest  180.00  in Valens on September 27, 2024 and sell it today you would earn a total of  23.00  from holding Valens or generate 12.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Valens  vs.  FREEPORT MCMORAN INC 4625

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 4625 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.

Pair Trading with Valens and FREEPORT

The main advantage of trading using opposite Valens and FREEPORT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens 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 Valens and FREEPORT MCMORAN INC 4625 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.