Correlation Between Digimarc and Copper Lake
Can any of the company-specific risk be diversified away by investing in both Digimarc and Copper Lake 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 Digimarc and Copper Lake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digimarc and Copper Lake Resources, you can compare the effects of market volatilities on Digimarc and Copper Lake 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 Digimarc with a short position of Copper Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and Copper Lake.
Diversification Opportunities for Digimarc and Copper Lake
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digimarc and Copper is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Copper Lake Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Lake Resources and Digimarc 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 Digimarc are associated (or correlated) with Copper Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Lake Resources has no effect on the direction of Digimarc i.e., Digimarc and Copper Lake go up and down completely randomly.
Pair Corralation between Digimarc and Copper Lake
Given the investment horizon of 90 days Digimarc is expected to generate 4.33 times less return on investment than Copper Lake. But when comparing it to its historical volatility, Digimarc is 9.22 times less risky than Copper Lake. It trades about 0.12 of its potential returns per unit of risk. Copper Lake Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.70 in Copper Lake Resources on September 26, 2024 and sell it today you would lose (0.55) from holding Copper Lake Resources or give up 78.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digimarc vs. Copper Lake Resources
Performance |
| Timeline |
| Digimarc |
| Copper Lake Resources |
Digimarc and Copper Lake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digimarc and Copper Lake
The main advantage of trading using opposite Digimarc and Copper Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc position performs unexpectedly, Copper Lake 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 Copper Lake will offset losses from the drop in Copper Lake's long position.| Digimarc vs. Accenture plc | Digimarc vs. Concentrix | Digimarc vs. Cognizant Technology Solutions | Digimarc vs. CDW Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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