Correlation Between DFS Furniture and Western Copper
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Western 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 DFS Furniture and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Western Copper and, you can compare the effects of market volatilities on DFS Furniture and Western 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 DFS Furniture with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Western Copper.
Diversification Opportunities for DFS Furniture and Western Copper
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between DFS and Western is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of DFS Furniture i.e., DFS Furniture and Western Copper go up and down completely randomly.
Pair Corralation between DFS Furniture and Western Copper
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 0.38 times more return on investment than Western Copper. However, DFS Furniture PLC is 2.63 times less risky than Western Copper. It trades about 0.28 of its potential returns per unit of risk. Western Copper and is currently generating about -0.01 per unit of risk. If you would invest 151.00 in DFS Furniture PLC on September 13, 2024 and sell it today you would earn a total of 15.00 from holding DFS Furniture PLC or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Western Copper and
Performance |
| Timeline |
| DFS Furniture PLC |
| Western Copper |
DFS Furniture and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Western Copper
The main advantage of trading using opposite DFS Furniture and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Western 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 Western Copper will offset losses from the drop in Western Copper's long position.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| Western Copper vs. BHP Group Limited | Western Copper vs. Vale SA | Western Copper vs. Superior Plus Corp | Western Copper vs. SIVERS SEMICONDUCTORS AB |
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.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |