Correlation Between Computershare and Cooper Metals

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Can any of the company-specific risk be diversified away by investing in both Computershare and Cooper Metals 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 Computershare and Cooper Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computershare and Cooper Metals, you can compare the effects of market volatilities on Computershare and Cooper Metals 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 Computershare with a short position of Cooper Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computershare and Cooper Metals.

Diversification Opportunities for Computershare and Cooper Metals

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Computershare and Cooper is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Computershare and Cooper Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Metals and Computershare 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 Computershare are associated (or correlated) with Cooper Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Metals has no effect on the direction of Computershare i.e., Computershare and Cooper Metals go up and down completely randomly.

Pair Corralation between Computershare and Cooper Metals

Assuming the 90 days trading horizon Computershare is expected to generate 0.33 times more return on investment than Cooper Metals. However, Computershare is 3.0 times less risky than Cooper Metals. It trades about 0.17 of its potential returns per unit of risk. Cooper Metals is currently generating about -0.03 per unit of risk. If you would invest  2,803  in Computershare on September 5, 2024 and sell it today you would earn a total of  485.00  from holding Computershare or generate 17.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Computershare  vs.  Cooper Metals

 Performance 
       Timeline  
Computershare 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Computershare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Computershare unveiled solid returns over the last few months and may actually be approaching a breakup point.
Cooper Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Computershare and Cooper Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Computershare and Cooper Metals

The main advantage of trading using opposite Computershare and Cooper Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computershare position performs unexpectedly, Cooper Metals 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 Cooper Metals will offset losses from the drop in Cooper Metals' long position.
The idea behind Computershare and Cooper Metals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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