Correlation Between Western Copper and Westshore Terminals
Can any of the company-specific risk be diversified away by investing in both Western Copper and Westshore Terminals 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 Westshore Terminals 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 Westshore Terminals Investment, you can compare the effects of market volatilities on Western Copper and Westshore Terminals 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 Westshore Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Westshore Terminals.
Diversification Opportunities for Western Copper and Westshore Terminals
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Westshore is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals 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 Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of Western Copper i.e., Western Copper and Westshore Terminals go up and down completely randomly.
Pair Corralation between Western Copper and Westshore Terminals
Assuming the 90 days trading horizon Western Copper is expected to generate 3.06 times less return on investment than Westshore Terminals. In addition to that, Western Copper is 3.95 times more volatile than Westshore Terminals Investment. It trades about 0.01 of its total potential returns per unit of risk. Westshore Terminals Investment is currently generating about 0.1 per unit of volatility. If you would invest 2,343 in Westshore Terminals Investment on August 29, 2024 and sell it today you would earn a total of 49.00 from holding Westshore Terminals Investment or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Westshore Terminals Investment
Performance |
| Timeline |
| Western Copper |
| Westshore Terminals |
Western Copper and Westshore Terminals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Westshore Terminals
The main advantage of trading using opposite Western Copper and Westshore Terminals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Westshore Terminals 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 Westshore Terminals will offset losses from the drop in Westshore Terminals' 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 |
| Westshore Terminals vs. Mullen Group | Westshore Terminals vs. Ritchie Bros Auctioneers | Westshore Terminals vs. Winpak | Westshore Terminals vs. North West |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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