Correlation Between Western Copper and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Western Copper and Summit Hotel 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 Summit Hotel 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 Summit Hotel Properties, you can compare the effects of market volatilities on Western Copper and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Summit Hotel.
Diversification Opportunities for Western Copper and Summit Hotel
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Summit is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Western Copper i.e., Western Copper and Summit Hotel go up and down completely randomly.
Pair Corralation between Western Copper and Summit Hotel
Assuming the 90 days trading horizon Western Copper and is expected to generate 1.84 times more return on investment than Summit Hotel. However, Western Copper is 1.84 times more volatile than Summit Hotel Properties. It trades about -0.01 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.05 per unit of risk. If you would invest 96.00 in Western Copper and on October 26, 2024 and sell it today you would lose (1.00) from holding Western Copper and or give up 1.04% 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. Summit Hotel Properties
Performance |
| Timeline |
| Western Copper |
| Summit Hotel Properties |
Western Copper and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Summit Hotel
The main advantage of trading using opposite Western Copper and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| Western Copper vs. BHP Group Limited | Western Copper vs. BHP Group Limited | Western Copper vs. Rio Tinto Group | Western Copper vs. Vale SA |
| Summit Hotel vs. Micron Technology | Summit Hotel vs. AECOM TECHNOLOGY | Summit Hotel vs. GEAR4MUSIC LS 10 | Summit Hotel vs. Western Copper and |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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