Correlation Between Copperbank Resources and Ero Copper

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

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

Diversification Opportunities for Copperbank Resources and Ero Copper

0.46

Correlation Coefficient

Copperbank Resources  Ero Copper

Very weak diversification

The 3 months correlation between Copperbank and Ero is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Copperbank Resources Corp and Ero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ero Copper Corp and Copperbank Resources 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 Copperbank Resources Corp are associated (or correlated) with Ero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ero Copper Corp has no effect on the direction of Copperbank Resources i.e., Copperbank Resources and Ero Copper go up and down completely randomly.

Pair Corralation between Copperbank Resources and Ero Copper

Assuming the 90 days horizon Copperbank Resources Corp is expected to generate 1.1 times more return on investment than Ero Copper. However, Copperbank Resources is 1.1 times more volatile than Ero Copper Corp. It trades about -0.16 of its potential returns per unit of risk. Ero Copper Corp is currently generating about -0.32 per unit of risk. If you would invest  66.00  in Copperbank Resources Corp on September 22, 2024 and sell it today you would lose (14.00) from holding Copperbank Resources Corp or give up 21.21% of portfolio value over 90 days.

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

Copperbank Resources Corp  vs.  Ero Copper Corp

Copperbank Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copperbank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ero Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ero Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Copperbank Resources and Ero Copper

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

The idea behind Copperbank Resources Corp and Ero Copper Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.