Correlation Between Western Copper and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Western Copper and Lifeway Foods 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 Lifeway Foods 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 Lifeway Foods, you can compare the effects of market volatilities on Western Copper and Lifeway Foods 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 Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Lifeway Foods.
Diversification Opportunities for Western Copper and Lifeway Foods
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Lifeway is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Western Copper i.e., Western Copper and Lifeway Foods go up and down completely randomly.
Pair Corralation between Western Copper and Lifeway Foods
Assuming the 90 days trading horizon Western Copper and is expected to generate 0.91 times more return on investment than Lifeway Foods. However, Western Copper and is 1.1 times less risky than Lifeway Foods. It trades about 0.1 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.08 per unit of risk. If you would invest 96.00 in Western Copper and on September 3, 2024 and sell it today you would earn a total of 8.00 from holding Western Copper and or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Lifeway Foods
Performance |
| Timeline |
| Western Copper |
| Lifeway Foods |
Western Copper and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Lifeway Foods
The main advantage of trading using opposite Western Copper and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' 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 |
| Lifeway Foods vs. Nestl SA | Lifeway Foods vs. Kraft Heinz Co | Lifeway Foods vs. General Mills | Lifeway Foods vs. Kellogg Company |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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