Correlation Between Western Copper and ERAMET SA
Can any of the company-specific risk be diversified away by investing in both Western Copper and ERAMET SA 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 ERAMET SA 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 ERAMET SA, you can compare the effects of market volatilities on Western Copper and ERAMET SA 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 ERAMET SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and ERAMET SA.
Diversification Opportunities for Western Copper and ERAMET SA
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and ERAMET is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and ERAMET SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERAMET SA 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 ERAMET SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERAMET SA has no effect on the direction of Western Copper i.e., Western Copper and ERAMET SA go up and down completely randomly.
Pair Corralation between Western Copper and ERAMET SA
Considering the 90-day investment horizon Western Copper and is expected to under-perform the ERAMET SA. In addition to that, Western Copper is 6.02 times more volatile than ERAMET SA. It trades about -0.11 of its total potential returns per unit of risk. ERAMET SA is currently generating about 0.09 per unit of volatility. If you would invest 5,685 in ERAMET SA on November 2, 2024 and sell it today you would earn a total of 44.00 from holding ERAMET SA or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. ERAMET SA
Performance |
| Timeline |
| Western Copper |
| ERAMET SA |
Western Copper and ERAMET SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and ERAMET SA
The main advantage of trading using opposite Western Copper and ERAMET SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, ERAMET SA 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 ERAMET SA will offset losses from the drop in ERAMET SA's long position.| Western Copper vs. Fury Gold Mines | Western Copper vs. EMX Royalty Corp | Western Copper vs. Nevada King Gold | Western Copper vs. Aftermath Silver |
| ERAMET SA vs. Iluka Resources Ltd | ERAMET SA vs. Giyani Metals Corp | ERAMET SA vs. IGO Limited | ERAMET SA vs. Grid Metals 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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