Correlation Between Northwest Copper and World Copper
Can any of the company-specific risk be diversified away by investing in both Northwest Copper and World 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 Northwest Copper and World Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Copper Corp and World Copper, you can compare the effects of market volatilities on Northwest Copper and World 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 Northwest Copper with a short position of World Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Copper and World Copper.
Diversification Opportunities for Northwest Copper and World Copper
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northwest and World is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Copper Corp and World Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Copper and Northwest Copper 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 Northwest Copper Corp are associated (or correlated) with World Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Copper has no effect on the direction of Northwest Copper i.e., Northwest Copper and World Copper go up and down completely randomly.
Pair Corralation between Northwest Copper and World Copper
Assuming the 90 days trading horizon Northwest Copper Corp is expected to under-perform the World Copper. In addition to that, Northwest Copper is 1.47 times more volatile than World Copper. It trades about -0.17 of its total potential returns per unit of risk. World Copper is currently generating about 0.09 per unit of volatility. If you would invest 5.50 in World Copper on November 2, 2024 and sell it today you would earn a total of 0.50 from holding World Copper or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Copper Corp vs. World Copper
Performance |
| Timeline |
| Northwest Copper Corp |
| World Copper |
Northwest Copper and World Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Copper and World Copper
The main advantage of trading using opposite Northwest Copper and World Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Copper position performs unexpectedly, World 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 World Copper will offset losses from the drop in World Copper's long position.| Northwest Copper vs. First Majestic Silver | Northwest Copper vs. Ivanhoe Energy | Northwest Copper vs. Flinders Resources Limited | Northwest Copper vs. Orezone Gold Corp |
| World Copper vs. QC Copper and | World Copper vs. Bell Copper Corp | World Copper vs. Northwest Copper Corp | World Copper vs. Wealth Minerals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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