Correlation Between Western Copper and Commerce Resources
Can any of the company-specific risk be diversified away by investing in both Western Copper and Commerce Resources 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 Commerce Resources 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 Commerce Resources Corp, you can compare the effects of market volatilities on Western Copper and Commerce Resources 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 Commerce Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Commerce Resources.
Diversification Opportunities for Western Copper and Commerce Resources
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Commerce is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Commerce Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Resources Corp 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 Commerce Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Resources Corp has no effect on the direction of Western Copper i.e., Western Copper and Commerce Resources go up and down completely randomly.
Pair Corralation between Western Copper and Commerce Resources
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Commerce Resources. But the stock apears to be less risky and, when comparing its historical volatility, Western Copper and is 2.46 times less risky than Commerce Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Commerce Resources Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Commerce Resources Corp on August 27, 2024 and sell it today you would lose (5.00) from holding Commerce Resources Corp or give up 38.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Commerce Resources Corp
Performance |
| Timeline |
| Western Copper |
| Commerce Resources Corp |
Western Copper and Commerce Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Commerce Resources
The main advantage of trading using opposite Western Copper and Commerce Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Commerce Resources 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 Commerce Resources will offset losses from the drop in Commerce Resources' 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 |
| Commerce Resources vs. First Majestic Silver | Commerce Resources vs. Ivanhoe Energy | Commerce Resources vs. Orezone Gold Corp | Commerce Resources vs. Faraday Copper Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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