Correlation Between Global X and Western Copper
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and Western Copper and, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Western Copper.
Diversification Opportunities for Global X and Western Copper
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Western is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Global X 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 X Active 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 Global X i.e., Global X and Western Copper go up and down completely randomly.
Pair Corralation between Global X and Western Copper
Assuming the 90 days trading horizon Global X is expected to generate 3.44 times less return on investment than Western Copper. But when comparing it to its historical volatility, Global X Active is 5.15 times less risky than Western Copper. It trades about 0.05 of its potential returns per unit of risk. Western Copper and is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 151.00 in Western Copper and on September 2, 2024 and sell it today you would earn a total of 6.00 from holding Western Copper and or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Global X Active vs. Western Copper and
Performance |
| Timeline |
| Global X Active |
| Western Copper |
Global X and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Western Copper
The main advantage of trading using opposite Global X and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income | Global X vs. BMO Aggregate Bond | Global X vs. iShares Canadian HYBrid |
| Western Copper vs. Kiplin Metals | Western Copper vs. Noram Lithium Corp | Western Copper vs. Minnova 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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