Correlation Between United States and Western Copper
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Western Copper and, you can compare the effects of market volatilities on United States 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 United States with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Western Copper.
Diversification Opportunities for United States and Western Copper
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Western is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and United States 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 United States Steel 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 United States i.e., United States and Western Copper go up and down completely randomly.
Pair Corralation between United States and Western Copper
Assuming the 90 days trading horizon United States Steel is expected to generate 0.88 times more return on investment than Western Copper. However, United States Steel is 1.14 times less risky than Western Copper. It trades about 0.04 of its potential returns per unit of risk. Western Copper and is currently generating about -0.02 per unit of risk. If you would invest 3,512 in United States Steel on August 30, 2024 and sell it today you would earn a total of 290.00 from holding United States Steel or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Western Copper and
Performance |
| Timeline |
| United States Steel |
| Western Copper |
United States and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Western Copper
The main advantage of trading using opposite United States and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Steel Dynamics | United States vs. Superior Plus Corp | United States vs. SIVERS SEMICONDUCTORS AB | United States vs. Identiv |
| Western Copper vs. SBA Communications Corp | Western Copper vs. Tower One Wireless | Western Copper vs. Cleanaway Waste Management | Western Copper vs. Scandinavian Tobacco Group |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |