Correlation Between Western Copper and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Western Copper and Postmedia Network 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 Postmedia Network 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 Postmedia Network Canada, you can compare the effects of market volatilities on Western Copper and Postmedia Network 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 Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Postmedia Network.
Diversification Opportunities for Western Copper and Postmedia Network
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Postmedia is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada 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 Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Western Copper i.e., Western Copper and Postmedia Network go up and down completely randomly.
Pair Corralation between Western Copper and Postmedia Network
Assuming the 90 days trading horizon Western Copper and is expected to generate 2.96 times more return on investment than Postmedia Network. However, Western Copper is 2.96 times more volatile than Postmedia Network Canada. It trades about 0.03 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.29 per unit of risk. If you would invest 159.00 in Western Copper and on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Western Copper and or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Postmedia Network Canada
Performance |
| Timeline |
| Western Copper |
| Postmedia Network Canada |
Western Copper and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Postmedia Network
The main advantage of trading using opposite Western Copper and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Postmedia Network 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 Postmedia Network will offset losses from the drop in Postmedia Network'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 |
| Postmedia Network vs. Genesis Land Development | Postmedia Network vs. ADF Group | Postmedia Network vs. Madison Pacific Properties | Postmedia Network vs. Goodfellow |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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