Correlation Between Cooper Metals and Transurban

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

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

Diversification Opportunities for Cooper Metals and Transurban

-0.32

Correlation Coefficient

Cooper Metals  Transurban

Very good diversification

The 3 months correlation between Cooper and Transurban is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Metals and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group and Cooper Metals 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 Cooper Metals are associated (or correlated) with Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Cooper Metals i.e., Cooper Metals and Transurban go up and down completely randomly.

Pair Corralation between Cooper Metals and Transurban

Assuming the 90 days trading horizon Cooper Metals is expected to under-perform the Transurban. In addition to that, Cooper Metals is 4.3 times more volatile than Transurban Group. It trades about -0.02 of its total potential returns per unit of risk. Transurban Group is currently generating about 0.08 per unit of volatility. If you would invest  1,256  in Transurban Group on December 1, 2024 and sell it today you would earn a total of  59.00  from holding Transurban Group or generate 4.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Cooper Metals  vs.  Transurban Group

Cooper Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cooper Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Cooper Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Transurban Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transurban Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Transurban is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cooper Metals and Transurban

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

The idea behind Cooper Metals and Transurban Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.