Correlation Between Copper Lake and Black Widow
Can any of the company-specific risk be diversified away by investing in both Copper Lake and Black Widow 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 Copper Lake and Black Widow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copper Lake Resources and Black Widow Resources, you can compare the effects of market volatilities on Copper Lake and Black Widow 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 Copper Lake with a short position of Black Widow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copper Lake and Black Widow.
Diversification Opportunities for Copper Lake and Black Widow
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Copper and Black is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Copper Lake Resources and Black Widow Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Widow Resources and Copper Lake 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 Copper Lake Resources are associated (or correlated) with Black Widow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Widow Resources has no effect on the direction of Copper Lake i.e., Copper Lake and Black Widow go up and down completely randomly.
Pair Corralation between Copper Lake and Black Widow
Assuming the 90 days horizon Copper Lake Resources is expected to generate 3.52 times more return on investment than Black Widow. However, Copper Lake is 3.52 times more volatile than Black Widow Resources. It trades about 0.12 of its potential returns per unit of risk. Black Widow Resources is currently generating about 0.01 per unit of risk. If you would invest 2.00 in Copper Lake Resources on November 3, 2024 and sell it today you would lose (1.00) 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copper Lake Resources vs. Black Widow Resources
Performance |
| Timeline |
| Copper Lake Resources |
| Black Widow Resources |
Copper Lake and Black Widow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copper Lake and Black Widow
The main advantage of trading using opposite Copper Lake and Black Widow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copper Lake position performs unexpectedly, Black Widow 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 Black Widow will offset losses from the drop in Black Widow's long position.| Copper Lake vs. Black Widow Resources | Copper Lake vs. Eros Resources Corp | Copper Lake vs. Magnum Goldcorp |
| Black Widow vs. Ramp Metals | Black Widow vs. Magna Mining | Black Widow vs. QC Copper and | Black Widow vs. AKITA Drilling |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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