Correlation Between Global Partners and Copper Lake
Can any of the company-specific risk be diversified away by investing in both Global Partners 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 Global Partners and Copper Lake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Partners LP and Copper Lake Resources, you can compare the effects of market volatilities on Global Partners 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 Global Partners with a short position of Copper Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Partners and Copper Lake.
Diversification Opportunities for Global Partners and Copper Lake
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Copper is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP 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 Global Partners 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 Global Partners LP 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 Global Partners i.e., Global Partners and Copper Lake go up and down completely randomly.
Pair Corralation between Global Partners and Copper Lake
Assuming the 90 days trading horizon Global Partners is expected to generate 55.5 times less return on investment than Copper Lake. But when comparing it to its historical volatility, Global Partners LP is 128.82 times less risky than Copper Lake. It trades about 0.13 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 | Very Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Global Partners LP vs. Copper Lake Resources
Performance |
| Timeline |
| Global Partners LP |
| Copper Lake Resources |
Global Partners and Copper Lake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Partners and Copper Lake
The main advantage of trading using opposite Global Partners and Copper Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Partners 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.| Global Partners vs. Watsco Inc | Global Partners vs. Fastenal Company | Global Partners vs. SiteOne Landscape Supply | Global Partners vs. Ferguson Plc |
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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