Correlation Between Western Copper and Look Holdings
Can any of the company-specific risk be diversified away by investing in both Western Copper and Look Holdings 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 Look Holdings 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 Look Holdings, you can compare the effects of market volatilities on Western Copper and Look Holdings 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 Look Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Look Holdings.
Diversification Opportunities for Western Copper and Look Holdings
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Look is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Look Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Look Holdings 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 Look Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Look Holdings has no effect on the direction of Western Copper i.e., Western Copper and Look Holdings go up and down completely randomly.
Pair Corralation between Western Copper and Look Holdings
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Look Holdings. In addition to that, Western Copper is 5.32 times more volatile than Look Holdings. It trades about -0.01 of its total potential returns per unit of risk. Look Holdings is currently generating about 0.18 per unit of volatility. If you would invest 1,540 in Look Holdings on September 13, 2024 and sell it today you would earn a total of 50.00 from holding Look Holdings or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Copper and vs. Look Holdings
Performance |
| Timeline |
| Western Copper |
| Look Holdings |
Western Copper and Look Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Look Holdings
The main advantage of trading using opposite Western Copper and Look Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Look Holdings 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 Look Holdings will offset losses from the drop in Look Holdings' 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 |
| Look Holdings vs. Apple Inc | Look Holdings vs. Apple Inc | Look Holdings vs. Apple Inc | Look Holdings vs. Apple Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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