Correlation Between Imperial Metals and Bell Copper
Can any of the company-specific risk be diversified away by investing in both Imperial Metals and Bell 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 Bell 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 Bell Copper, you can compare the effects of market volatilities on Imperial Metals and Bell 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 Bell Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Metals and Bell Copper.
Diversification Opportunities for Imperial Metals and Bell Copper
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Imperial and Bell is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Metals and Bell Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell 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 Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper has no effect on the direction of Imperial Metals i.e., Imperial Metals and Bell Copper go up and down completely randomly.
Pair Corralation between Imperial Metals and Bell Copper
Assuming the 90 days horizon Imperial Metals is expected to generate 9.01 times less return on investment than Bell Copper. But when comparing it to its historical volatility, Imperial Metals is 4.23 times less risky than Bell Copper. It trades about 0.01 of its potential returns per unit of risk. Bell Copper is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7.30 in Bell Copper on September 1, 2024 and sell it today you would lose (4.30) from holding Bell Copper or give up 58.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Metals vs. Bell Copper
Performance |
| Timeline |
| Imperial Metals |
| Bell Copper |
Imperial Metals and Bell Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Metals and Bell Copper
The main advantage of trading using opposite Imperial Metals and Bell Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Metals position performs unexpectedly, Bell 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 Bell Copper will offset losses from the drop in Bell Copper's long position.| Imperial Metals vs. South32 Limited | Imperial Metals vs. NioCorp Developments Ltd | Imperial Metals vs. HUMANA INC | Imperial Metals vs. SCOR PK |
| Bell Copper vs. South32 Limited | Bell Copper vs. NioCorp Developments Ltd | Bell Copper vs. HUMANA INC | Bell Copper vs. SCOR PK |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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