Correlation Between Western Copper and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Western Copper and Methode Electronics 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 Methode Electronics 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 Methode Electronics, you can compare the effects of market volatilities on Western Copper and Methode Electronics 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 Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Methode Electronics.
Diversification Opportunities for Western Copper and Methode Electronics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Methode is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Western Copper i.e., Western Copper and Methode Electronics go up and down completely randomly.
Pair Corralation between Western Copper and Methode Electronics
Assuming the 90 days trading horizon Western Copper and is expected to generate 0.75 times more return on investment than Methode Electronics. However, Western Copper and is 1.34 times less risky than Methode Electronics. It trades about -0.01 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.05 per unit of risk. If you would invest 137.00 in Western Copper and on October 19, 2024 and sell it today you would lose (37.00) from holding Western Copper and or give up 27.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Methode Electronics
Performance |
| Timeline |
| Western Copper |
| Methode Electronics |
Western Copper and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Methode Electronics
The main advantage of trading using opposite Western Copper and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Western Copper vs. X FAB Silicon Foundries | Western Copper vs. SILICON LABORATOR | Western Copper vs. TRI CHEMICAL LABORATINC | Western Copper vs. Siamgas And Petrochemicals |
| Methode Electronics vs. GALENA MINING LTD | Methode Electronics vs. CNVISION MEDIA | Methode Electronics vs. Western Copper and | Methode Electronics vs. Universal Entertainment |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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