Correlation Between Western Copper and Hemisphere Energy
Can any of the company-specific risk be diversified away by investing in both Western Copper and Hemisphere Energy 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 Hemisphere Energy 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 Hemisphere Energy, you can compare the effects of market volatilities on Western Copper and Hemisphere Energy 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 Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Hemisphere Energy.
Diversification Opportunities for Western Copper and Hemisphere Energy
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Hemisphere is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Hemisphere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy 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 Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy has no effect on the direction of Western Copper i.e., Western Copper and Hemisphere Energy go up and down completely randomly.
Pair Corralation between Western Copper and Hemisphere Energy
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Hemisphere Energy. In addition to that, Western Copper is 2.8 times more volatile than Hemisphere Energy. It trades about -0.05 of its total potential returns per unit of risk. Hemisphere Energy is currently generating about -0.13 per unit of volatility. If you would invest 187.00 in Hemisphere Energy on November 7, 2024 and sell it today you would lose (5.00) from holding Hemisphere Energy or give up 2.67% 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. Hemisphere Energy
Performance |
| Timeline |
| Western Copper |
| Hemisphere Energy |
Western Copper and Hemisphere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Hemisphere Energy
The main advantage of trading using opposite Western Copper and Hemisphere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Hemisphere Energy 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 Hemisphere Energy will offset losses from the drop in Hemisphere Energy's long position.The idea behind Western Copper and and Hemisphere Energy 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.| Hemisphere Energy vs. Prairie Provident Resources | Hemisphere Energy vs. Pine Cliff Energy | Hemisphere Energy vs. Southern Energy Corp | Hemisphere Energy vs. iShares Canadian HYBrid |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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