Correlation Between Black Widow and Copper Lake
Can any of the company-specific risk be diversified away by investing in both Black Widow and Copper Lake 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 Black Widow and Copper Lake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Widow Resources and Copper Lake Resources, you can compare the effects of market volatilities on Black Widow and Copper Lake 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 Black Widow with a short position of Copper Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Widow and Copper Lake.
Diversification Opportunities for Black Widow and Copper Lake
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Black and Copper is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Black Widow Resources and Copper Lake Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Lake Resources and Black Widow 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 Black Widow Resources are associated (or correlated) with Copper Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Lake Resources has no effect on the direction of Black Widow i.e., Black Widow and Copper Lake go up and down completely randomly.
Pair Corralation between Black Widow and Copper Lake
Assuming the 90 days horizon Black Widow Resources is expected to under-perform the Copper Lake. But the stock apears to be less risky and, when comparing its historical volatility, Black Widow Resources is 4.16 times less risky than Copper Lake. The stock trades about -0.31 of its potential returns per unit of risk. The Copper Lake Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Copper Lake Resources on September 1, 2024 and sell it today you would lose (0.50) from holding Copper Lake Resources or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Widow Resources vs. Copper Lake Resources
Performance |
| Timeline |
| Black Widow Resources |
| Copper Lake Resources |
Black Widow and Copper Lake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Widow and Copper Lake
The main advantage of trading using opposite Black Widow and Copper Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Widow position performs unexpectedly, Copper Lake 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 Lake will offset losses from the drop in Copper Lake's long position.| Black Widow vs. Kiplin Metals | Black Widow vs. Pure Energy Minerals | Black Widow vs. Noram Lithium Corp | Black Widow vs. Minnova Corp |
| Copper Lake vs. Black Widow Resources | Copper Lake vs. Eros Resources Corp | Copper Lake vs. Magnum Goldcorp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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