Correlation Between Economic Investment and Western Copper
Can any of the company-specific risk be diversified away by investing in both Economic Investment 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 Economic Investment and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Economic Investment Trust and Western Copper and, you can compare the effects of market volatilities on Economic Investment 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 Economic Investment with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Western Copper.
Diversification Opportunities for Economic Investment and Western Copper
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Economic and Western is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Economic Investment 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 Economic Investment Trust 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 Economic Investment i.e., Economic Investment and Western Copper go up and down completely randomly.
Pair Corralation between Economic Investment and Western Copper
Assuming the 90 days trading horizon Economic Investment Trust is expected to generate 0.18 times more return on investment than Western Copper. However, Economic Investment Trust is 5.7 times less risky than Western Copper. It trades about 0.4 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 16,525 in Economic Investment Trust on August 29, 2024 and sell it today you would earn a total of 925.00 from holding Economic Investment Trust or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Economic Investment Trust vs. Western Copper and
Performance |
| Timeline |
| Economic Investment Trust |
| Western Copper |
Economic Investment and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and Western Copper
The main advantage of trading using opposite Economic Investment and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment 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.| Economic Investment vs. Canadian Natural Resources | Economic Investment vs. Suncor Energy | Economic Investment vs. iShares Canadian HYBrid | Economic Investment vs. Altagas Cum Red |
| Western Copper vs. First Majestic Silver | Western Copper vs. Ivanhoe Energy | Western Copper vs. Orezone Gold Corp | Western Copper vs. Faraday Copper 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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