Why Freeport-McMoRan Lost 11% Of Its Value In A Month?
Freeport-McMoRan Inc. signage is displayed on a monitor on the floor of the New York Stock Exchange ... [+] (NYSE) in New York, U.S., on Friday, Oct. 21, 2016. U.S. stocks trimmed losses as deal activity boosted consumer stocks and Microsoft Corp. rose toward a record, offsetting losses spurred by concerns a stronger dollar will damp corporate earnings. Photographer: Michael Nagle/Bloomberg  2016 Bloomberg Finance LP  Freeport-McMoRan stock (NYSE: FCX) has dropped almost 11% in the last one month and currently trades at $37 per share. The decline in the stock was mainly due to weakness in commodity prices. Faster economic recovery expectations, lifting of lockdowns, and successful vaccine rollout has led to a drop in global gold prices. The price of gold has dropped from over $1,880/ounce a month back to $1,775/ounce currently, marking a decline of more than 5.5% in the last one month. Additionally, copper prices have also declined over the last month from over $4.60/pound to $4.20/pound currently, marking a decline of 9% in a month. This was driven by Chinas decision to crack down on rising commodity prices. The market expects China to release state reserves of copper while also possibly trimming long positions and cracking down on speculative activity. FCX gets all of its revenue from gold and copper and thus a drop in price of both these commodities has led to the stock seeing a decline of close to 11% in its value. According to the Trefis Machine Learning Engine, which identifies trends in a companys stock price data for the last ten years, returns for FCX stock average close to 11% in the next three-month (63 trading days) period after experiencing an 11% drop over the previous one-month (21 trading days) period. You can test the answer and many other combinations on the Trefis Machine Learning to test FCX stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day! MACHINE LEARNING ENGINE  try it yourself:  IF FCX stock moved by -5% over five trading days, THEN over the next 21 trading days, FCX stock moves an average of 1.8 percent, with a 51% probability of positive return over this period. FCX stock fares better after Case 2, with an average return of 1.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 3.7% for Case 2. In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise. Try the Trefis machine learning engine above to see for yourself how Freeport stock is likely to behave after any specific gain or loss over a period. Answer:  If you buy and hold Freeport stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you - at least if the company is otherwise strong. Overall, according to data and Trefis machine learning engines calculations, patience absolutely pays for most stocks! Answer:  The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks - although FCX stock appears to be an exception to this general observation. FCXs returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:  Average Return Trefis  Its pretty powerful to test the trend for yourself for Freeport stock by changing the inputs in the charts above. While FCX stock may have moved, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, youll be surprised how the stock valuation for Compass Minerals vs Southwest Gas shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here. See all Trefis Featured Analyses and Download Trefis Data here