Correlation Between Grid Metals and Western Copper
Can any of the company-specific risk be diversified away by investing in both Grid 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 Grid 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 Grid Metals Corp and Western Copper and, you can compare the effects of market volatilities on Grid 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 Grid Metals with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grid Metals and Western Copper.
Diversification Opportunities for Grid Metals and Western Copper
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grid and Western is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Grid Metals Corp and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Grid 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 Grid Metals Corp 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 Grid Metals i.e., Grid Metals and Western Copper go up and down completely randomly.
Pair Corralation between Grid Metals and Western Copper
Assuming the 90 days horizon Grid Metals Corp is expected to under-perform the Western Copper. In addition to that, Grid Metals is 1.84 times more volatile than Western Copper and. It trades about -0.05 of its total potential returns per unit of risk. Western Copper and is currently generating about 0.0 per unit of volatility. If you would invest 125.00 in Western Copper and on September 2, 2024 and sell it today you would lose (14.00) from holding Western Copper and or give up 11.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Grid Metals Corp vs. Western Copper and
Performance |
| Timeline |
| Grid Metals Corp |
| Western Copper |
Grid Metals and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grid Metals and Western Copper
The main advantage of trading using opposite Grid Metals and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grid 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.The idea behind Grid Metals Corp and Western Copper and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Western Copper vs. Fury Gold Mines | Western Copper vs. EMX Royalty Corp | Western Copper vs. Nevada King Gold | Western Copper vs. Aftermath Silver |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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