Correlation Between VIRG NATL and Western Copper
Can any of the company-specific risk be diversified away by investing in both VIRG NATL and Western Copper 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 VIRG NATL and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIRG NATL BANKSH and Western Copper and, you can compare the effects of market volatilities on VIRG NATL and Western Copper 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 VIRG NATL with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRG NATL and Western Copper.
Diversification Opportunities for VIRG NATL and Western Copper
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VIRG and Western is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding VIRG NATL BANKSH and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and VIRG NATL 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 VIRG NATL BANKSH are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of VIRG NATL i.e., VIRG NATL and Western Copper go up and down completely randomly.
Pair Corralation between VIRG NATL and Western Copper
Assuming the 90 days horizon VIRG NATL BANKSH is expected to generate 0.64 times more return on investment than Western Copper. However, VIRG NATL BANKSH is 1.56 times less risky than Western Copper. It trades about 0.14 of its potential returns per unit of risk. Western Copper and is currently generating about 0.04 per unit of risk. If you would invest 3,600 in VIRG NATL BANKSH on August 31, 2024 and sell it today you would earn a total of 300.00 from holding VIRG NATL BANKSH 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 |
VIRG NATL BANKSH vs. Western Copper and
Performance |
| Timeline |
| VIRG NATL BANKSH |
| Western Copper |
VIRG NATL and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIRG NATL and Western Copper
The main advantage of trading using opposite VIRG NATL and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIRG NATL position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.The idea behind VIRG NATL BANKSH and Western Copper and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Western Copper vs. MTI WIRELESS EDGE | Western Copper vs. Playa Hotels Resorts | Western Copper vs. Playtech plc | Western Copper vs. INTERSHOP Communications Aktiengesellschaft |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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