Correlation Between Dore Copper and World Copper
Can any of the company-specific risk be diversified away by investing in both Dore Copper and World Copper 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 Dore Copper and World Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dore Copper Mining and World Copper, you can compare the effects of market volatilities on Dore Copper and World Copper 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 Dore Copper with a short position of World Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dore Copper and World Copper.
Diversification Opportunities for Dore Copper and World Copper
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dore and World is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dore Copper Mining and World Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Copper and Dore 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 Dore Copper Mining are associated (or correlated) with World Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Copper has no effect on the direction of Dore Copper i.e., Dore Copper and World Copper go up and down completely randomly.
Pair Corralation between Dore Copper and World Copper
Assuming the 90 days trading horizon Dore Copper Mining is expected to under-perform the World Copper. But the stock apears to be less risky and, when comparing its historical volatility, Dore Copper Mining is 2.23 times less risky than World Copper. The stock trades about -0.3 of its potential returns per unit of risk. The World Copper is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 8.50 in World Copper on September 13, 2024 and sell it today you would lose (1.00) from holding World Copper or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dore Copper Mining vs. World Copper
Performance |
| Timeline |
| Dore Copper Mining |
| World Copper |
Dore Copper and World Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dore Copper and World Copper
The main advantage of trading using opposite Dore Copper and World Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dore Copper position performs unexpectedly, World Copper 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 World Copper will offset losses from the drop in World Copper's long position.| Dore Copper vs. Arizona Sonoran Copper | Dore Copper vs. Marimaca Copper Corp | Dore Copper vs. World Copper | Dore Copper vs. QC Copper and |
| World Copper vs. Arizona Sonoran Copper | World Copper vs. Marimaca Copper Corp | World Copper vs. QC Copper and | World Copper vs. Dore Copper Mining |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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