Freeport-McMoRan stock (NYSE: FCX) has dropped 3% in just the last one week and now trades at $36 per share. The recent decline in the stock was driven by a drop in global copper prices last week. The copper price fell more than 2% on 1st September 2021 and was also down almost 2% in the last week (week ending 3rd September 2021) as data showed that factory activity slowed in August across major parts of Europe and Asia. In China, manufacturing contracted for the first time in nearly one and a half years. China’s state reserves administration also released 150,000 tons of copper, aluminum, and zinc in the market that led to some cooling in copper prices. As most of FCX’s revenues are contributed by copper, the company’s stock fell 3% on the back of a decline in prices of the metal.
But, after the recent decline, will FCX’s stock continue its downward trajectory over the coming weeks, or is a recovery in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for FCX stock average approx 1.4% in the next one-month (21 trading days) period after experiencing a 3% drop over the previous one-week (five trading days) period. The stock has about 50% probability of rising over the next one month. But how would these numbers change if you are interested in holding FCX stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test FCX stock chances of 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 2 percent, with a 52% probability of a positive return.
Some Fun Scenarios, FAQs & Making Sense of FCX Stock Movements:
Question 1: Is the average return for Freeport stock higher after a drop?
Consider two situations,
Case 1: Freeport stock drops by -5% or more in a week
Case 2: Freeport stock rises by 5% or more in a week
Is the average return for Freeport stock higher over the subsequent month after Case 1 or Case 2?
FCX stock fares better after Case 2, with an average return of 1.9% 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 4% 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.
Question 2: Does patience pay?
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 engine’s calculations, patience absolutely pays for most stocks!
For FCX stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
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.
FCX’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Freeport stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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