Correlation Between Western Copper and Monument Mining
Can any of the company-specific risk be diversified away by investing in both Western Copper and Monument Mining 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 Monument Mining 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 Monument Mining Limited, you can compare the effects of market volatilities on Western Copper and Monument Mining 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 Monument Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Monument Mining.
Diversification Opportunities for Western Copper and Monument Mining
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Monument is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining 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 Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Western Copper i.e., Western Copper and Monument Mining go up and down completely randomly.
Pair Corralation between Western Copper and Monument Mining
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Monument Mining. But the stock apears to be less risky and, when comparing its historical volatility, Western Copper and is 1.77 times less risky than Monument Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Monument Mining Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Monument Mining Limited on September 3, 2024 and sell it today you would earn a total of 18.00 from holding Monument Mining Limited or generate 225.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Monument Mining Limited
Performance |
| Timeline |
| Western Copper |
| Monument Mining |
Western Copper and Monument Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Monument Mining
The main advantage of trading using opposite Western Copper and Monument Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Monument Mining 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 Monument Mining will offset losses from the drop in Monument Mining's long position.| Western Copper vs. Algoma Steel Group | Western Copper vs. Champion Iron | Western Copper vs. International Zeolite Corp | Western Copper vs. European Residential Real |
| Monument Mining vs. Majestic Gold Corp | Monument Mining vs. Gunpoint Exploration | Monument Mining vs. Q Gold Resources | Monument Mining vs. MAS Gold 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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