Correlation Between Western Copper and Avalon Advanced
Can any of the company-specific risk be diversified away by investing in both Western Copper and Avalon Advanced 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 Western Copper and Avalon Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and Avalon Advanced Materials, you can compare the effects of market volatilities on Western Copper and Avalon Advanced 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 Western Copper with a short position of Avalon Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Avalon Advanced.
Diversification Opportunities for Western Copper and Avalon Advanced
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Avalon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Avalon Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalon Advanced Materials and Western 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 Western Copper and are associated (or correlated) with Avalon Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalon Advanced Materials has no effect on the direction of Western Copper i.e., Western Copper and Avalon Advanced go up and down completely randomly.
Pair Corralation between Western Copper and Avalon Advanced
Assuming the 90 days trading horizon Western Copper and is expected to generate 0.44 times more return on investment than Avalon Advanced. However, Western Copper and is 2.28 times less risky than Avalon Advanced. It trades about -0.01 of its potential returns per unit of risk. Avalon Advanced Materials is currently generating about -0.01 per unit of risk. If you would invest 220.00 in Western Copper and on August 27, 2024 and sell it today you would lose (62.00) from holding Western Copper and or give up 28.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Avalon Advanced Materials
Performance |
| Timeline |
| Western Copper |
| Avalon Advanced Materials |
Western Copper and Avalon Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Avalon Advanced
The main advantage of trading using opposite Western Copper and Avalon Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Avalon Advanced 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 Avalon Advanced will offset losses from the drop in Avalon Advanced's long position.| Western Copper vs. First Majestic Silver | Western Copper vs. Ivanhoe Energy | Western Copper vs. Orezone Gold Corp | Western Copper vs. Faraday Copper Corp |
| Avalon Advanced vs. Ucore Rare Metals | Avalon Advanced vs. Canada Rare Earth | Avalon Advanced vs. Commerce Resources Corp | Avalon Advanced vs. Western 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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