Correlation Between Western Copper and Rocky Mountain
Can any of the company-specific risk be diversified away by investing in both Western Copper and Rocky Mountain 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 Rocky Mountain 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 Rocky Mountain Liquor, you can compare the effects of market volatilities on Western Copper and Rocky Mountain 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 Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Rocky Mountain.
Diversification Opportunities for Western Copper and Rocky Mountain
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Rocky is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor 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 Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of Western Copper i.e., Western Copper and Rocky Mountain go up and down completely randomly.
Pair Corralation between Western Copper and Rocky Mountain
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Rocky Mountain. But the stock apears to be less risky and, when comparing its historical volatility, Western Copper and is 1.88 times less risky than Rocky Mountain. The stock trades about -0.02 of its potential returns per unit of risk. The Rocky Mountain Liquor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Rocky Mountain Liquor on September 5, 2024 and sell it today you would lose (3.00) from holding Rocky Mountain Liquor or give up 21.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Rocky Mountain Liquor
Performance |
| Timeline |
| Western Copper |
| Rocky Mountain Liquor |
Western Copper and Rocky Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Rocky Mountain
The main advantage of trading using opposite Western Copper and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Rocky Mountain 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 Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.The idea behind Western Copper and and Rocky Mountain Liquor 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.| Rocky Mountain vs. CI Financial Corp | Rocky Mountain vs. Laurentian Bank | Rocky Mountain vs. AGF Management Limited | Rocky Mountain vs. InPlay Oil 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |