Correlation Between Western Copper and Commander Resources
Can any of the company-specific risk be diversified away by investing in both Western Copper and Commander 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 Commander 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 Commander Resources, you can compare the effects of market volatilities on Western Copper and Commander 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 Commander Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Commander Resources.
Diversification Opportunities for Western Copper and Commander Resources
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Commander is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Commander Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commander Resources 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 Commander Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commander Resources has no effect on the direction of Western Copper i.e., Western Copper and Commander Resources go up and down completely randomly.
Pair Corralation between Western Copper and Commander Resources
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Commander Resources. But the stock apears to be less risky and, when comparing its historical volatility, Western Copper and is 2.23 times less risky than Commander Resources. The stock trades about -0.09 of its potential returns per unit of risk. The Commander Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Commander Resources on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Commander Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Copper and vs. Commander Resources
Performance |
| Timeline |
| Western Copper |
| Commander Resources |
Western Copper and Commander Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Commander Resources
The main advantage of trading using opposite Western Copper and Commander Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Commander 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 Commander Resources will offset losses from the drop in Commander Resources' long position.The idea behind Western Copper and and Commander Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Commander Resources vs. Bausch Health Companies | Commander Resources vs. Bird Construction | Commander Resources vs. North American Construction | Commander Resources vs. Brookfield Office Properties |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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