Correlation Between Northwest Copper and Dore Copper

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

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

Diversification Opportunities for Northwest Copper and Dore Copper

-0.36

Correlation Coefficient

Northwest Copper  Dore Copper

Very good diversification

The 3 months correlation between Northwest and Dore is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Copper Corp and Dore Copper Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dore Copper Mining and Northwest Copper 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 Northwest Copper Corp are associated (or correlated) with Dore Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dore Copper Mining has no effect on the direction of Northwest Copper i.e., Northwest Copper and Dore Copper go up and down completely randomly.

Pair Corralation between Northwest Copper and Dore Copper

Assuming the 90 days trading horizon Northwest Copper Corp is expected to under-perform the Dore Copper. But the stock apears to be less risky and, when comparing its historical volatility, Northwest Copper Corp is 1.59 times less risky than Dore Copper. The stock trades about -0.08 of its potential returns per unit of risk. The Dore Copper Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Dore Copper Mining on September 4, 2024 and sell it today you would earn a total of  3.00  from holding Dore Copper Mining or generate 27.27% return on investment over 90 days.

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

Northwest Copper Corp  vs.  Dore Copper Mining

Northwest Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northwest Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Dore Copper Mining

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Northwest Copper and Dore Copper

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

The idea behind Northwest Copper Corp and Dore Copper Mining 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.