Correlation Between NYSE Composite and CopperCorp Resources

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

Diversification Opportunities for NYSE Composite and CopperCorp Resources

NYSECopperCorpDiversified AwayNYSECopperCorpDiversified Away100%
0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between NYSE and CopperCorp is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and CopperCorp Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CopperCorp Resources and NYSE Composite 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 NYSE Composite are associated (or correlated) with CopperCorp Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CopperCorp Resources has no effect on the direction of NYSE Composite i.e., NYSE Composite and CopperCorp Resources go up and down completely randomly.
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Pair Corralation between NYSE Composite and CopperCorp Resources

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the CopperCorp Resources. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 21.76 times less risky than CopperCorp Resources. The index trades about -0.02 of its potential returns per unit of risk. The CopperCorp Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5.69  in CopperCorp Resources on September 27, 2024 and sell it today you would earn a total of  5.31  from holding CopperCorp Resources or generate 93.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

NYSE Composite  vs.  CopperCorp Resources

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 050100150200250300
JavaScript chart by amCharts 3.21.15NYA CPCPF
       Timeline  

NYSE Composite and CopperCorp Resources Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.01-0.73-0.45-0.17-0.0130.09790.370.650.931.21 0.20.40.60.8
JavaScript chart by amCharts 3.21.15NYA CPCPF
       Returns  

Pair Trading with NYSE Composite and CopperCorp Resources

The main advantage of trading using opposite NYSE Composite and CopperCorp Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, CopperCorp Resources 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 CopperCorp Resources will offset losses from the drop in CopperCorp Resources' long position.
The idea behind NYSE Composite and CopperCorp Resources 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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