Correlation Between Western Copper and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both Western Copper and Precision Drilling 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 Precision Drilling 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 Precision Drilling, you can compare the effects of market volatilities on Western Copper and Precision Drilling 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 Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Precision Drilling.
Diversification Opportunities for Western Copper and Precision Drilling
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Precision is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Western Copper i.e., Western Copper and Precision Drilling go up and down completely randomly.
Pair Corralation between Western Copper and Precision Drilling
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Precision Drilling. In addition to that, Western Copper is 1.14 times more volatile than Precision Drilling. It trades about -0.01 of its total potential returns per unit of risk. Precision Drilling is currently generating about 0.0 per unit of volatility. If you would invest 10,451 in Precision Drilling on August 26, 2024 and sell it today you would lose (1,181) from holding Precision Drilling or give up 11.3% 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. Precision Drilling
Performance |
| Timeline |
| Western Copper |
| Precision Drilling |
Western Copper and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Precision Drilling
The main advantage of trading using opposite Western Copper and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Precision Drilling 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 Precision Drilling will offset losses from the drop in Precision Drilling'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 |
| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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