Correlation Between European Residential and Kodiak Copper

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

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

Diversification Opportunities for European Residential and Kodiak Copper

-0.28

Correlation Coefficient

European Residential  Kodiak Copper

Very good diversification

The 3 months correlation between European and Kodiak is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Kodiak Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Copper Corp and European Residential 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 European Residential Real are associated (or correlated) with Kodiak Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Copper Corp has no effect on the direction of European Residential i.e., European Residential and Kodiak Copper go up and down completely randomly.

Pair Corralation between European Residential and Kodiak Copper

Assuming the 90 days trading horizon European Residential Real is expected to under-perform the Kodiak Copper. In addition to that, European Residential is 1.53 times more volatile than Kodiak Copper Corp. It trades about -0.09 of its total potential returns per unit of risk. Kodiak Copper Corp is currently generating about 0.07 per unit of volatility. If you would invest  41.00  in Kodiak Copper Corp on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Kodiak Copper Corp or generate 12.2% return on investment over 90 days.

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

European Residential Real  vs.  Kodiak Copper Corp

European Residential Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days European Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kodiak Copper Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Copper Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kodiak Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with European Residential and Kodiak Copper

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

The idea behind European Residential Real and Kodiak 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.