Correlation Between FIREWEED METALS and WESTERN COPPER

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

By analyzing existing cross correlation between FIREWEED METALS P and WESTERN PER, you can compare the effects of market volatilities on FIREWEED METALS 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 FIREWEED METALS with a short position of WESTERN COPPER. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIREWEED METALS and WESTERN COPPER.

Diversification Opportunities for FIREWEED METALS and WESTERN COPPER

-0.05

Correlation Coefficient

FIREWEED METALS  WESTERN COPPER

Good diversification

The 3 months correlation between FIREWEED and WESTERN is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding FIREWEED METALS P and WESTERN PER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN COPPER and FIREWEED 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 FIREWEED METALS P 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 FIREWEED METALS i.e., FIREWEED METALS and WESTERN COPPER go up and down completely randomly.

Pair Corralation between FIREWEED METALS and WESTERN COPPER

Assuming the 90 days horizon FIREWEED METALS P is expected to generate 1.18 times more return on investment than WESTERN COPPER. However, FIREWEED METALS is 1.18 times more volatile than WESTERN PER. It trades about 0.08 of its potential returns per unit of risk. WESTERN PER is currently generating about 0.05 per unit of risk. If you would invest  94.00  in FIREWEED METALS P on December 22, 2024 and sell it today you would earn a total of  13.00  from holding FIREWEED METALS P or generate 13.83% return on investment over 90 days.

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

FIREWEED METALS P  vs.  WESTERN PER

FIREWEED METALS P

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIREWEED METALS P are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FIREWEED METALS reported solid returns over the last few months and may actually be approaching a breakup point.

WESTERN COPPER

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN PER are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, WESTERN COPPER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FIREWEED METALS and WESTERN COPPER

The main advantage of trading using opposite FIREWEED METALS and WESTERN COPPER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIREWEED METALS 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 FIREWEED METALS P and WESTERN PER 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.