Correlation Between Freeport McMoran and Capstone Copper

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

Diversification Opportunities for Freeport McMoran and Capstone Copper

0.7

Correlation Coefficient

Freeport McMoran  Capstone Copper

Poor diversification

The 3 months correlation between Freeport and Capstone is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold and Capstone Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Copper Corp 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 Capstone Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Copper Corp has no effect on the direction of Freeport McMoran i.e., Freeport McMoran and Capstone Copper go up and down completely randomly.

Pair Corralation between Freeport McMoran and Capstone Copper

Considering the 90-day investment horizon Freeport McMoran is expected to generate 3.37 times less return on investment than Capstone Copper. But when comparing it to its historical volatility, Freeport McMoran Copper Gold is 1.26 times less risky than Capstone Copper. It trades about 0.06 of its potential returns per unit of risk. Capstone Copper Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  509.00  in Capstone Copper Corp on May 12, 2025 and sell it today you would earn a total of  158.00  from holding Capstone Copper Corp or generate 31.04% return on investment over 90 days.

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

Freeport McMoran Copper Gold  vs.  Capstone Copper Corp

Freeport McMoran Copper

Risk-Adjusted Performance

Soft

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

Capstone Copper Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Copper Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Capstone Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freeport McMoran and Capstone Copper

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

The idea behind Freeport McMoran Copper Gold and Capstone Copper Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.