Correlation Between Northern Dynasty and Western Copper
Can any of the company-specific risk be diversified away by investing in both Northern Dynasty 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 Northern Dynasty and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Dynasty Minerals and Western Copper and, you can compare the effects of market volatilities on Northern Dynasty 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 Northern Dynasty with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Dynasty and Western Copper.
Diversification Opportunities for Northern Dynasty and Western Copper
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and Western is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Northern Dynasty Minerals and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Northern Dynasty 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 Northern Dynasty Minerals 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 Northern Dynasty i.e., Northern Dynasty and Western Copper go up and down completely randomly.
Pair Corralation between Northern Dynasty and Western Copper
Considering the 90-day investment horizon Northern Dynasty Minerals is expected to generate 1.49 times more return on investment than Western Copper. However, Northern Dynasty is 1.49 times more volatile than Western Copper and. It trades about 0.05 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 25.00 in Northern Dynasty Minerals on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Northern Dynasty Minerals or generate 84.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Dynasty Minerals vs. Western Copper and
Performance |
| Timeline |
| Northern Dynasty Minerals |
| Western Copper |
Northern Dynasty and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Dynasty and Western Copper
The main advantage of trading using opposite Northern Dynasty and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Dynasty 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.| Northern Dynasty vs. Vale SA ADR | Northern Dynasty vs. Teck Resources Ltd | Northern Dynasty vs. BHP Group Limited | Northern Dynasty vs. Glencore PLC ADR |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |