Correlation Between Western Copper and TRANSAT AT
Can any of the company-specific risk be diversified away by investing in both Western Copper and TRANSAT AT 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 Western Copper and TRANSAT AT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and TRANSAT AT VAR, you can compare the effects of market volatilities on Western Copper and TRANSAT AT 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 Western Copper with a short position of TRANSAT AT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and TRANSAT AT.
Diversification Opportunities for Western Copper and TRANSAT AT
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and TRANSAT is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and TRANSAT AT VAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSAT AT VAR and Western Copper 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 Western Copper and are associated (or correlated) with TRANSAT AT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSAT AT VAR has no effect on the direction of Western Copper i.e., Western Copper and TRANSAT AT go up and down completely randomly.
Pair Corralation between Western Copper and TRANSAT AT
Assuming the 90 days trading horizon Western Copper is expected to generate 10.72 times less return on investment than TRANSAT AT. In addition to that, Western Copper is 1.56 times more volatile than TRANSAT AT VAR. It trades about 0.01 of its total potential returns per unit of risk. TRANSAT AT VAR is currently generating about 0.15 per unit of volatility. If you would invest 117.00 in TRANSAT AT VAR on September 14, 2024 and sell it today you would earn a total of 10.00 from holding TRANSAT AT VAR or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. TRANSAT AT VAR
Performance |
| Timeline |
| Western Copper |
| TRANSAT AT VAR |
Western Copper and TRANSAT AT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and TRANSAT AT
The main advantage of trading using opposite Western Copper and TRANSAT AT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, TRANSAT AT 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 TRANSAT AT will offset losses from the drop in TRANSAT AT's long position.| Western Copper vs. BHP Group Limited | Western Copper vs. Vale SA | Western Copper vs. Superior Plus Corp | Western Copper vs. SIVERS SEMICONDUCTORS AB |
| TRANSAT AT vs. Playa Hotels Resorts | TRANSAT AT vs. Dalata Hotel Group | TRANSAT AT vs. Western Copper and | TRANSAT AT vs. Park Hotels Resorts |
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 the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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