Correlation Between CDL INVESTMENT and Western Copper

Can any of the company-specific risk be diversified away by investing in both CDL INVESTMENT and Western Copper 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 CDL INVESTMENT and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CDL INVESTMENT and Western Copper and, you can compare the effects of market volatilities on CDL INVESTMENT and Western Copper 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 CDL INVESTMENT with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and Western Copper.

Diversification Opportunities for CDL INVESTMENT and Western Copper

0.04

Correlation Coefficient

CDL INVESTMENT  Western Copper

Significant diversification

The 3 months correlation between CDL and Western is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and CDL INVESTMENT 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 CDL INVESTMENT are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of CDL INVESTMENT i.e., CDL INVESTMENT and Western Copper go up and down completely randomly.

Pair Corralation between CDL INVESTMENT and Western Copper

Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 0.73 times more return on investment than Western Copper. However, CDL INVESTMENT is 1.37 times less risky than Western Copper. It trades about 0.01 of its potential returns per unit of risk. Western Copper and is currently generating about -0.08 per unit of risk. If you would invest  44.00  in CDL INVESTMENT on October 5, 2024 and sell it today you would earn a total of  0.00  from holding CDL INVESTMENT or generate 0.0% return on investment over 90 days.

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

CDL INVESTMENT  vs.  Western Copper and

CDL INVESTMENT

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CDL INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Western Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CDL INVESTMENT and Western Copper

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

The idea behind CDL INVESTMENT and Western Copper and 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.