Correlation Between Western Copper and GMS
Can any of the company-specific risk be diversified away by investing in both Western Copper and GMS 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 GMS 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 GMS Inc, you can compare the effects of market volatilities on Western Copper and GMS 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 GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and GMS.
Diversification Opportunities for Western Copper and GMS
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and GMS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc 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 GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Western Copper i.e., Western Copper and GMS go up and down completely randomly.
Pair Corralation between Western Copper and GMS
Considering the 90-day investment horizon Western Copper and is expected to under-perform the GMS. In addition to that, Western Copper is 1.74 times more volatile than GMS Inc. It trades about -0.01 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.08 per unit of volatility. If you would invest 6,453 in GMS Inc on August 27, 2024 and sell it today you would earn a total of 3,717 from holding GMS Inc or generate 57.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. GMS Inc
Performance |
| Timeline |
| Western Copper |
| GMS Inc |
Western Copper and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and GMS
The main advantage of trading using opposite Western Copper and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS'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 |
| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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