Copper just had a strong month, a sign the global economy is improving. How to trade it
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Economic bellwether copper is in an uptrend, and there are several ways for investors to bet on the metal’s rally to continue. The price of copper futures rose more than 6% in July, its strongest month since January. And it is still about 9% below its 12-month high, so there may still be upside from here. @HG.1 3M mountain The price of copper surged in July. The run-up for the metal appeared to give a boost to some related companies. The stocks below are Russell 1000 members who have a correlation to copper of at least 0.5 over the past 50 days, according to Refinitiv. The list includes material companies that mine the mineral, including Southern Copper Corp. and Freeport-McMoRan . Both have 50-day correlations above 0.7 with the price of copper. Shares of Southern Copper jumped nearly 22% last month, while Freeport-McMoRan gained 11.6%. Investors can also play copper miners through ETFs. For example, the Global X Copper Miners ETF (COPX) holds those two stocks and their competitors, and rose more than 10% in July. There are some other stocks on the list that have a less obvious exposure to copper, such as financial stocks Invesco and KKR . While those stocks pass the short-term threshold for correlation used in this screen, their five-year average correlation to copper is below 0.3, suggesting that the relationship is weaker than the recent run makes it appear. The similar movements of financial stocks and copper may make some sense, however. The metal often referred to as “Doctor Copper” is seen as a leading economic indicator, and financial stocks are cyclical plays. Financial stocks and copper rising could be a sign that business leaders and investors are growing more confident about the economy.
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