Correlation Between Western Copper and Gold Road
Can any of the company-specific risk be diversified away by investing in both Western Copper and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Western Copper and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Gold Road.
Diversification Opportunities for Western Copper and Gold Road
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Gold is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Western Copper i.e., Western Copper and Gold Road go up and down completely randomly.
Pair Corralation between Western Copper and Gold Road
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Gold Road. In addition to that, Western Copper is 1.61 times more volatile than Gold Road Resources. It trades about -0.01 of its total potential returns per unit of risk. Gold Road Resources is currently generating about 0.37 per unit of volatility. If you would invest 106.00 in Gold Road Resources on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Gold Road Resources or generate 22.64% 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. Gold Road Resources
Performance |
| Timeline |
| Western Copper |
| Gold Road Resources |
Western Copper and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Gold Road
The main advantage of trading using opposite Western Copper and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road'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 |
| Gold Road vs. Franco Nevada | Gold Road vs. Superior Plus Corp | Gold Road vs. SIVERS SEMICONDUCTORS AB | Gold Road vs. Norsk Hydro ASA |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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