Correlation Between Western Copper and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both Western Copper and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide, you can compare the effects of market volatilities on Western Copper and Kronos Worldwide 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 Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Kronos Worldwide.
Diversification Opportunities for Western Copper and Kronos Worldwide
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Kronos is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Western Copper i.e., Western Copper and Kronos Worldwide go up and down completely randomly.
Pair Corralation between Western Copper and Kronos Worldwide
Assuming the 90 days trading horizon Western Copper and is expected to generate 1.04 times more return on investment than Kronos Worldwide. However, Western Copper is 1.04 times more volatile than Kronos Worldwide. It trades about 0.01 of its potential returns per unit of risk. Kronos Worldwide is currently generating about -0.02 per unit of risk. If you would invest 107.00 in Western Copper and on September 3, 2024 and sell it today you would lose (4.00) from holding Western Copper and or give up 3.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Kronos Worldwide
Performance |
| Timeline |
| Western Copper |
| Kronos Worldwide |
Western Copper and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Kronos Worldwide
The main advantage of trading using opposite Western Copper and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's long position.| Western Copper vs. Tower One Wireless | Western Copper vs. Ribbon Communications | Western Copper vs. Mobilezone Holding AG | Western Copper vs. COMBA TELECOM SYST |
| Kronos Worldwide vs. Pure Storage | Kronos Worldwide vs. Automatic Data Processing | Kronos Worldwide vs. Dalata Hotel Group | Kronos Worldwide vs. NH HOTEL GROUP |
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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