Correlation Between Freeport McMoran and Merrill Lynch
Can any of the company-specific risk be diversified away by investing in both Freeport McMoran and Merrill Lynch 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 McMoran and Merrill Lynch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoran Copper Gold and Merrill Lynch Depositor, you can compare the effects of market volatilities on Freeport McMoran and Merrill Lynch 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 McMoran with a short position of Merrill Lynch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoran and Merrill Lynch.
Diversification Opportunities for Freeport McMoran and Merrill Lynch
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Freeport and Merrill is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold and Merrill Lynch Depositor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merrill Lynch Depositor and Freeport McMoran 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 Copper Gold are associated (or correlated) with Merrill Lynch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merrill Lynch Depositor has no effect on the direction of Freeport McMoran i.e., Freeport McMoran and Merrill Lynch go up and down completely randomly.
Pair Corralation between Freeport McMoran and Merrill Lynch
Considering the 90-day investment horizon Freeport McMoran Copper Gold is expected to under-perform the Merrill Lynch. In addition to that, Freeport McMoran is 2.37 times more volatile than Merrill Lynch Depositor. It trades about -0.02 of its total potential returns per unit of risk. Merrill Lynch Depositor is currently generating about -0.01 per unit of volatility. If you would invest 2,565 in Merrill Lynch Depositor on March 11, 2024 and sell it today you would lose (19.00) from holding Merrill Lynch Depositor or give up 0.74% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Freeport McMoran Copper Gold vs. Merrill Lynch Depositor
Performance |
Timeline |
Freeport McMoran Copper |
Merrill Lynch Depositor |
Freeport McMoran and Merrill Lynch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freeport McMoran and Merrill Lynch
The main advantage of trading using opposite Freeport McMoran and Merrill Lynch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoran position performs unexpectedly, Merrill Lynch 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 Merrill Lynch will offset losses from the drop in Merrill Lynch's long position.Freeport McMoran vs. Ivanhoe Electric | Freeport McMoran vs. Ero Copper Corp | Freeport McMoran vs. Taseko Mines | Freeport McMoran vs. Metals Acquisition Limited |
Merrill Lynch vs. CMS Energy Corp | Merrill Lynch vs. Southern Co | Merrill Lynch vs. Duke Energy Corp | Merrill Lynch vs. Southern Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |