Correlation Between Cars and Western Copper

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

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

Diversification Opportunities for Cars and Western Copper

0.13

Correlation Coefficient

Cars  Western Copper

Average diversification

The 3 months correlation between Cars and Western is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Cars 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 Cars Inc 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 Cars i.e., Cars and Western Copper go up and down completely randomly.

Pair Corralation between Cars and Western Copper

Given the investment horizon of 90 days Cars Inc is expected to under-perform the Western Copper. In addition to that, Cars is 1.25 times more volatile than Western Copper and. It trades about -0.17 of its total potential returns per unit of risk. Western Copper and is currently generating about -0.01 per unit of volatility. If you would invest  109.00  in Western Copper and on December 2, 2024 and sell it today you would lose (4.00) from holding Western Copper and or give up 3.67% of portfolio value over 90 days.

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

Cars Inc  vs.  Western Copper and

Cars Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cars Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Western Copper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Western Copper is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cars and Western Copper

The main advantage of trading using opposite Cars and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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 Cars Inc 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.

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