Correlation Between Algoma Steel and Freeport McMoran
Can any of the company-specific risk be diversified away by investing in both Algoma Steel 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 Algoma Steel and Freeport McMoran into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algoma Steel Group and Freeport McMoran Copper Gold, you can compare the effects of market volatilities on Algoma Steel 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 Algoma Steel with a short position of Freeport McMoran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Freeport McMoran.
Diversification Opportunities for Algoma Steel and Freeport McMoran
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algoma and Freeport is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Freeport McMoran Copper Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoran Copper and Algoma Steel 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 Algoma Steel Group 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 Copper has no effect on the direction of Algoma Steel i.e., Algoma Steel and Freeport McMoran go up and down completely randomly.
Pair Corralation between Algoma Steel and Freeport McMoran
Given the investment horizon of 90 days Algoma Steel is expected to generate 2.04 times less return on investment than Freeport McMoran. In addition to that, Algoma Steel is 1.1 times more volatile than Freeport McMoran Copper Gold. It trades about 0.02 of its total potential returns per unit of risk. Freeport McMoran Copper Gold is currently generating about 0.04 per unit of volatility. If you would invest 3,933 in Freeport McMoran Copper Gold on March 17, 2025 and sell it today you would earn a total of 161.00 from holding Freeport McMoran Copper Gold or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algoma Steel Group vs. Freeport McMoran Copper Gold
Performance |
| Timeline |
| Algoma Steel Group |
| Freeport McMoran Copper |
Algoma Steel and Freeport McMoran Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Freeport McMoran
The main advantage of trading using opposite Algoma Steel and Freeport McMoran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel 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.| Algoma Steel vs. Friedman Industries Common | Algoma Steel vs. ArcelorMittal SA | Algoma Steel vs. Aperam PK | Algoma Steel vs. Acerinox SA ADR |
| Freeport McMoran vs. Ero Copper Corp | Freeport McMoran vs. Amerigo Resources | Freeport McMoran vs. Hudbay Minerals | Freeport McMoran vs. Southern Copper |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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