Correlation Between Varta AG and Western Copper

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

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

Diversification Opportunities for Varta AG and Western Copper

0.25

Correlation Coefficient

Varta AG  Western Copper

Modest diversification

The 3 months correlation between Varta and Western is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Varta AG 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 Varta AG 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 Varta AG i.e., Varta AG and Western Copper go up and down completely randomly.

Pair Corralation between Varta AG and Western Copper

Assuming the 90 days trading horizon Varta AG is expected to under-perform the Western Copper. In addition to that, Varta AG is 3.12 times more volatile than Western Copper and. It trades about -0.13 of its total potential returns per unit of risk. Western Copper and is currently generating about 0.09 per unit of volatility. If you would invest  101.00  in Western Copper and on October 9, 2024 and sell it today you would earn a total of  3.00  from holding Western Copper and or generate 2.97% return on investment over 90 days.

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

Varta AG  vs.  Western Copper and

Varta AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite nearly stable basic indicators, Western Copper is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Varta AG and Western Copper

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

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.