Correlation Between Pure Energy and Western Copper
Can any of the company-specific risk be diversified away by investing in both Pure Energy 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 Pure Energy and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Energy Minerals and Western Copper and, you can compare the effects of market volatilities on Pure Energy 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 Pure Energy with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Energy and Western Copper.
Diversification Opportunities for Pure Energy and Western Copper
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pure and Western is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pure Energy 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 Pure Energy 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 Pure Energy 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 Pure Energy i.e., Pure Energy and Western Copper go up and down completely randomly.
Pair Corralation between Pure Energy and Western Copper
Given the investment horizon of 90 days Pure Energy Minerals is expected to under-perform the Western Copper. In addition to that, Pure Energy is 1.46 times more volatile than Western Copper and. It trades about -0.01 of its total potential returns per unit of risk. Western Copper and is currently generating about 0.04 per unit of volatility. If you would invest 154.00 in Western Copper and on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Western Copper and or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Energy Minerals vs. Western Copper and
Performance |
| Timeline |
| Pure Energy Minerals |
| Western Copper |
Pure Energy and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Energy and Western Copper
The main advantage of trading using opposite Pure Energy and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Energy 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.| Pure Energy vs. Algoma Steel Group | Pure Energy vs. Champion Iron | Pure Energy vs. International Zeolite Corp | Pure Energy vs. European Residential Real |
| Western Copper vs. Algoma Steel Group | Western Copper vs. Champion Iron | Western Copper vs. International Zeolite Corp | Western Copper vs. European Residential Real |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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