Correlation Between Cooper Metals and Resmed
Can any of the company-specific risk be diversified away by investing in both Cooper Metals and Resmed 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 Resmed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Metals and Resmed Inc DRC, you can compare the effects of market volatilities on Cooper Metals and Resmed 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 Resmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Metals and Resmed.
Diversification Opportunities for Cooper Metals and Resmed
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cooper and Resmed is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Metals and Resmed Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resmed Inc DRC 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 Resmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resmed Inc DRC has no effect on the direction of Cooper Metals i.e., Cooper Metals and Resmed go up and down completely randomly.
Pair Corralation between Cooper Metals and Resmed
Assuming the 90 days trading horizon Cooper Metals is expected to under-perform the Resmed. In addition to that, Cooper Metals is 3.44 times more volatile than Resmed Inc DRC. It trades about -0.08 of its total potential returns per unit of risk. Resmed Inc DRC is currently generating about 0.1 per unit of volatility. If you would invest 2,464 in Resmed Inc DRC on September 2, 2024 and sell it today you would earn a total of 1,376 from holding Resmed Inc DRC or generate 55.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cooper Metals vs. Resmed Inc DRC
Performance |
| Timeline |
| Cooper Metals |
| Resmed Inc DRC |
Cooper Metals and Resmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Metals and Resmed
The main advantage of trading using opposite Cooper Metals and Resmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Metals position performs unexpectedly, Resmed 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 Resmed will offset losses from the drop in Resmed's long position.| Cooper Metals vs. American West Metals | Cooper Metals vs. Medical Developments International | Cooper Metals vs. Aristocrat Leisure | Cooper Metals vs. Viva Leisure |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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