Correlation Between Western Copper and Avient Corp
Can any of the company-specific risk be diversified away by investing in both Western Copper and Avient Corp 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 Avient Corp 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 Avient Corp, you can compare the effects of market volatilities on Western Copper and Avient Corp 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 Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Avient Corp.
Diversification Opportunities for Western Copper and Avient Corp
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Avient is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp 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 Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Western Copper i.e., Western Copper and Avient Corp go up and down completely randomly.
Pair Corralation between Western Copper and Avient Corp
Considering the 90-day investment horizon Western Copper is expected to generate 4.98 times less return on investment than Avient Corp. In addition to that, Western Copper is 1.74 times more volatile than Avient Corp. It trades about 0.02 of its total potential returns per unit of risk. Avient Corp is currently generating about 0.15 per unit of volatility. If you would invest 4,801 in Avient Corp on August 26, 2024 and sell it today you would earn a total of 316.00 from holding Avient Corp or generate 6.58% 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. Avient Corp
Performance |
| Timeline |
| Western Copper |
| Avient Corp |
Western Copper and Avient Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Avient Corp
The main advantage of trading using opposite Western Copper and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Avient Corp 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 Avient Corp will offset losses from the drop in Avient Corp's long position.| Western Copper vs. Vale SA ADR | Western Copper vs. Teck Resources Ltd | Western Copper vs. MP Materials Corp | Western Copper vs. BHP Group Limited |
| Avient Corp vs. Axalta Coating Systems | Avient Corp vs. H B Fuller | Avient Corp vs. Quaker Chemical | Avient Corp vs. Cabot |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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