Correlation Between Cooper Metals and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Cooper Metals and Champion Iron 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 Cooper Metals and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Metals and Champion Iron, you can compare the effects of market volatilities on Cooper Metals and Champion Iron 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 Cooper Metals with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Metals and Champion Iron.
Diversification Opportunities for Cooper Metals and Champion Iron
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cooper and Champion is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Metals and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and Cooper Metals 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 Cooper Metals are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Cooper Metals i.e., Cooper Metals and Champion Iron go up and down completely randomly.
Pair Corralation between Cooper Metals and Champion Iron
Assuming the 90 days trading horizon Cooper Metals is expected to under-perform the Champion Iron. In addition to that, Cooper Metals is 2.04 times more volatile than Champion Iron. It trades about -0.09 of its total potential returns per unit of risk. Champion Iron is currently generating about -0.03 per unit of volatility. If you would invest 676.00 in Champion Iron on September 3, 2024 and sell it today you would lose (103.00) from holding Champion Iron or give up 15.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cooper Metals vs. Champion Iron
Performance |
| Timeline |
| Cooper Metals |
| Champion Iron |
Cooper Metals and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Metals and Champion Iron
The main advantage of trading using opposite Cooper Metals and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Metals position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| Cooper Metals vs. Richmond Vanadium Technology | Cooper Metals vs. Metro Mining | Cooper Metals vs. Ras Technology Holdings | Cooper Metals vs. Dug Technology |
| Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron vs. Aneka Tambang Tbk |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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