Correlation Between Laurentian Bank and Alta Copper
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank and Alta 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 Laurentian Bank and Alta Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laurentian Bank and Alta Copper Corp, you can compare the effects of market volatilities on Laurentian Bank and Alta 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 Laurentian Bank with a short position of Alta Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and Alta Copper.
Diversification Opportunities for Laurentian Bank and Alta Copper
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Laurentian and Alta is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank and Alta Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Copper Corp and Laurentian Bank 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 Laurentian Bank are associated (or correlated) with Alta Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Copper Corp has no effect on the direction of Laurentian Bank i.e., Laurentian Bank and Alta Copper go up and down completely randomly.
Pair Corralation between Laurentian Bank and Alta Copper
Assuming the 90 days horizon Laurentian Bank is expected to under-perform the Alta Copper. But the stock apears to be less risky and, when comparing its historical volatility, Laurentian Bank is 2.79 times less risky than Alta Copper. The stock trades about -0.02 of its potential returns per unit of risk. The Alta Copper Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Alta Copper Corp on September 12, 2024 and sell it today you would lose (4.00) from holding Alta Copper Corp or give up 8.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. Alta Copper Corp
Performance |
| Timeline |
| Laurentian Bank |
| Alta Copper Corp |
Laurentian Bank and Alta Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and Alta Copper
The main advantage of trading using opposite Laurentian Bank and Alta Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank position performs unexpectedly, Alta 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 Alta Copper will offset losses from the drop in Alta Copper's long position.| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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