Correlation Between Bell Copper and Copper Fox
Can any of the company-specific risk be diversified away by investing in both Bell Copper and Copper Fox 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 Bell Copper and Copper Fox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Copper and Copper Fox Metals, you can compare the effects of market volatilities on Bell Copper and Copper Fox 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 Bell Copper with a short position of Copper Fox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Copper and Copper Fox.
Diversification Opportunities for Bell Copper and Copper Fox
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bell and Copper is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bell Copper and Copper Fox Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Fox Metals and Bell 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 Bell Copper are associated (or correlated) with Copper Fox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Fox Metals has no effect on the direction of Bell Copper i.e., Bell Copper and Copper Fox go up and down completely randomly.
Pair Corralation between Bell Copper and Copper Fox
Assuming the 90 days horizon Bell Copper is expected to generate 4.36 times more return on investment than Copper Fox. However, Bell Copper is 4.36 times more volatile than Copper Fox Metals. It trades about 0.12 of its potential returns per unit of risk. Copper Fox Metals is currently generating about 0.14 per unit of risk. If you would invest 2.78 in Bell Copper on August 25, 2024 and sell it today you would earn a total of 0.42 from holding Bell Copper or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bell Copper vs. Copper Fox Metals
Performance |
| Timeline |
| Bell Copper |
| Copper Fox Metals |
Bell Copper and Copper Fox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Copper and Copper Fox
The main advantage of trading using opposite Bell Copper and Copper Fox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Copper position performs unexpectedly, Copper Fox 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 Copper Fox will offset losses from the drop in Copper Fox's long position.| Bell Copper vs. Ascendant Resources | Bell Copper vs. Cantex Mine Development | Bell Copper vs. Amarc Resources | Bell Copper vs. Sterling Metals Corp |
| Copper Fox vs. Ascendant Resources | Copper Fox vs. Cantex Mine Development | Copper Fox vs. Amarc Resources | Copper Fox vs. Sterling Metals Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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