Correlation Between World Copper and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both World Copper and Labrador Iron 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 World Copper and Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Copper and Labrador Iron Ore, you can compare the effects of market volatilities on World Copper and Labrador Iron 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 World Copper with a short position of Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Copper and Labrador Iron.
Diversification Opportunities for World Copper and Labrador Iron
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between World and Labrador is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding World Copper and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and World 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 World Copper are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of World Copper i.e., World Copper and Labrador Iron go up and down completely randomly.
Pair Corralation between World Copper and Labrador Iron
Assuming the 90 days horizon World Copper is expected to generate 6.6 times more return on investment than Labrador Iron. However, World Copper is 6.6 times more volatile than Labrador Iron Ore. It trades about 0.04 of its potential returns per unit of risk. Labrador Iron Ore is currently generating about 0.01 per unit of risk. If you would invest 7.00 in World Copper on September 14, 2024 and sell it today you would earn a total of 0.25 from holding World Copper or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Copper vs. Labrador Iron Ore
Performance |
| Timeline |
| World Copper |
| Labrador Iron Ore |
World Copper and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Copper and Labrador Iron
The main advantage of trading using opposite World Copper and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Copper position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| World Copper vs. Arizona Sonoran Copper | World Copper vs. Marimaca Copper Corp | World Copper vs. QC Copper and | World Copper vs. Dore Copper Mining |
| Labrador Iron vs. Arizona Sonoran Copper | Labrador Iron vs. Marimaca Copper Corp | Labrador Iron vs. World Copper | Labrador Iron vs. QC Copper and |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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