Correlation Between Western Copper and MTI WIRELESS

Can any of the company-specific risk be diversified away by investing in both Western Copper and MTI WIRELESS 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 MTI WIRELESS 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 MTI WIRELESS EDGE, you can compare the effects of market volatilities on Western Copper and MTI WIRELESS 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 MTI WIRELESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and MTI WIRELESS.

Diversification Opportunities for Western Copper and MTI WIRELESS

0.31

Correlation Coefficient

Western Copper  MTI WIRELESS

Weak diversification

The 3 months correlation between Western and MTI is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and MTI WIRELESS EDGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI WIRELESS EDGE 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 MTI WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI WIRELESS EDGE has no effect on the direction of Western Copper i.e., Western Copper and MTI WIRELESS go up and down completely randomly.

Pair Corralation between Western Copper and MTI WIRELESS

Assuming the 90 days trading horizon Western Copper is expected to generate 1.51 times less return on investment than MTI WIRELESS. In addition to that, Western Copper is 1.07 times more volatile than MTI WIRELESS EDGE. It trades about 0.03 of its total potential returns per unit of risk. MTI WIRELESS EDGE is currently generating about 0.05 per unit of volatility. If you would invest  43.00  in MTI WIRELESS EDGE on August 31, 2024 and sell it today you would earn a total of  3.00  from holding MTI WIRELESS EDGE or generate 6.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Western Copper and  vs.  MTI WIRELESS EDGE

Western Copper

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Copper and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Western Copper may actually be approaching a critical reversion point that can send shares even higher in December 2024.

MTI WIRELESS EDGE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MTI WIRELESS EDGE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MTI WIRELESS may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Western Copper and MTI WIRELESS

The main advantage of trading using opposite Western Copper and MTI WIRELESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, MTI WIRELESS 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 MTI WIRELESS will offset losses from the drop in MTI WIRELESS's long position.

The idea behind Western Copper and and MTI WIRELESS EDGE 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.