Correlation Between Freeport McMoran and Hamilton Lane

Can any of the company-specific risk be diversified away by investing in both Freeport McMoran and Hamilton Lane 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 Hamilton Lane 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 Hamilton Lane Private, you can compare the effects of market volatilities on Freeport McMoran and Hamilton Lane 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 Hamilton Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoran and Hamilton Lane.

Diversification Opportunities for Freeport McMoran and Hamilton Lane

-0.48

Correlation Coefficient

Freeport McMoran  Hamilton Lane

Very good diversification

The 3 months correlation between Freeport and Hamilton is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold and Hamilton Lane Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Lane Private 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 Hamilton Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Lane Private has no effect on the direction of Freeport McMoran i.e., Freeport McMoran and Hamilton Lane go up and down completely randomly.

Pair Corralation between Freeport McMoran and Hamilton Lane

If you would invest  4,522  in Freeport McMoran Copper Gold on January 25, 2024 and sell it today you would earn a total of  302.00  from holding Freeport McMoran Copper Gold or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Freeport McMoran Copper Gold  vs.  Hamilton Lane Private

Freeport McMoran Copper

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freeport McMoran Copper Gold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Freeport McMoran showed solid returns over the last few months and may actually be approaching a breakup point.

Hamilton Lane Private

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Hamilton Lane Private has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak forward indicators, Hamilton Lane showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freeport McMoran and Hamilton Lane

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

The idea behind Freeport McMoran Copper Gold and Hamilton Lane Private 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.