Correlation Between Imperial Metals and Western Copper
Can any of the company-specific risk be diversified away by investing in both Imperial Metals 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 Imperial Metals and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Metals and Western Copper and, you can compare the effects of market volatilities on Imperial Metals 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 Imperial Metals with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Metals and Western Copper.
Diversification Opportunities for Imperial Metals and Western Copper
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Imperial and Western is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Metals and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Imperial Metals 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 Imperial Metals 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 Imperial Metals i.e., Imperial Metals and Western Copper go up and down completely randomly.
Pair Corralation between Imperial Metals and Western Copper
Assuming the 90 days trading horizon Imperial Metals is expected to generate 1.06 times more return on investment than Western Copper. However, Imperial Metals is 1.06 times more volatile than Western Copper and. It trades about 0.02 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 200.00 in Imperial Metals on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Imperial Metals or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Metals vs. Western Copper and
Performance |
| Timeline |
| Imperial Metals |
| Western Copper |
Imperial Metals and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Metals and Western Copper
The main advantage of trading using opposite Imperial Metals and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Metals 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.| Imperial Metals vs. Taseko Mines | Imperial Metals vs. Mountain Boy Minerals | Imperial Metals vs. iMetal Resources | Imperial Metals vs. Western Copper and |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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