Correlation Between Nevada King and Western Copper

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

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

Diversification Opportunities for Nevada King and Western Copper

0.2

Correlation Coefficient

Nevada King  Western Copper

Modest diversification

The 3 months correlation between Nevada and Western is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nevada King Gold and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Nevada King 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 Nevada King Gold 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 Nevada King i.e., Nevada King and Western Copper go up and down completely randomly.

Pair Corralation between Nevada King and Western Copper

Assuming the 90 days horizon Nevada King is expected to generate 1.42 times less return on investment than Western Copper. In addition to that, Nevada King is 1.99 times more volatile than Western Copper and. It trades about 0.03 of its total potential returns per unit of risk. Western Copper and is currently generating about 0.08 per unit of volatility. If you would invest  104.00  in Western Copper and on December 30, 2024 and sell it today you would earn a total of  13.00  from holding Western Copper and or generate 12.5% return on investment over 90 days.

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

Nevada King Gold  vs.  Western Copper and

Nevada King Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nevada King Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nevada King may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Western Copper

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Copper and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Western Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nevada King and Western Copper

The main advantage of trading using opposite Nevada King and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nevada King 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 Nevada King Gold and Western Copper and 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..