Correlation Between GreenSky and Freeport Mcmoran

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Can any of the company-specific risk be diversified away by investing in both GreenSky 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 GreenSky and Freeport Mcmoran into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenSky and Freeport-Mcmoran, you can compare the effects of market volatilities on GreenSky 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 GreenSky with a short position of Freeport Mcmoran. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenSky and Freeport Mcmoran.

Diversification Opportunities for GreenSky and Freeport Mcmoran

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between GreenSky and Freeport is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GreenSky Inc and Freeport-Mcmoran in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport-Mcmoran and GreenSky 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 GreenSky 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 has no effect on the direction of GreenSky i.e., GreenSky and Freeport Mcmoran go up and down completely randomly.

Pair Corralation between GreenSky and Freeport Mcmoran

If you would invest  3,220  in Freeport-Mcmoran on August 29, 2022 and sell it today you would earn a total of  495.00  from holding Freeport-Mcmoran or generate 15.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy4.55%
ValuesDaily Returns

GreenSky Inc  vs.  Freeport-Mcmoran

 Performance (%) 
       Timeline  
GreenSky 
GreenSky Performance
0 of 100
Over the last 90 days GreenSky has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, GreenSky is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Freeport-Mcmoran 
Freeport Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Freeport-Mcmoran are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Freeport Mcmoran showed solid returns over the last few months and may actually be approaching a breakup point.

Freeport Price Channel

GreenSky and Freeport Mcmoran Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GreenSky and Freeport Mcmoran

The main advantage of trading using opposite GreenSky and Freeport Mcmoran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenSky 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.
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The idea behind GreenSky and Freeport-Mcmoran 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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