Correlation Between 30327TAA7 and Western Copper

Can any of the company-specific risk be diversified away by investing in both 30327TAA7 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 30327TAA7 and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FIP 105 01 JUN 27 and Western Copper and, you can compare the effects of market volatilities on 30327TAA7 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 30327TAA7 with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of 30327TAA7 and Western Copper.

Diversification Opportunities for 30327TAA7 and Western Copper

0.29

Correlation Coefficient

30327TAA7  Western Copper

Modest diversification

The 3 months correlation between 30327TAA7 and Western is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding FIP 105 01 JUN 27 and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and 30327TAA7 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 FIP 105 01 JUN 27 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 30327TAA7 i.e., 30327TAA7 and Western Copper go up and down completely randomly.

Pair Corralation between 30327TAA7 and Western Copper

Assuming the 90 days trading horizon FIP 105 01 JUN 27 is expected to under-perform the Western Copper. But the bond apears to be less risky and, when comparing its historical volatility, FIP 105 01 JUN 27 is 1.27 times less risky than Western Copper. The bond trades about -0.07 of its potential returns per unit of risk. The Western Copper and is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Western Copper and on October 10, 2024 and sell it today you would lose (11.00) from holding Western Copper and or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.49%
Values	Daily Returns

FIP 105 01 JUN 27  vs.  Western Copper and

FIP 105 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIP 105 01 JUN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FIP 105 01 JUN 27 investors.

Western Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with 30327TAA7 and Western Copper

The main advantage of trading using opposite 30327TAA7 and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 30327TAA7 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 FIP 105 01 JUN 27 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 Transaction History module to view history of all your transactions and understand their impact on performance.