Correlation Between World Copper and Steppe Gold

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

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

Diversification Opportunities for World Copper and Steppe Gold

0.3

Correlation Coefficient

World Copper  Steppe Gold

Weak diversification

The 3 months correlation between World and Steppe is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding World Copper and Steppe Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steppe Gold and World 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 World Copper are associated (or correlated) with Steppe Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steppe Gold has no effect on the direction of World Copper i.e., World Copper and Steppe Gold go up and down completely randomly.

Pair Corralation between World Copper and Steppe Gold

Assuming the 90 days horizon World Copper is expected to generate 1.51 times more return on investment than Steppe Gold. However, World Copper is 1.51 times more volatile than Steppe Gold. It trades about 0.03 of its potential returns per unit of risk. Steppe Gold is currently generating about 0.0 per unit of risk. If you would invest  7.50  in World Copper on September 15, 2024 and sell it today you would earn a total of  0.00  from holding World Copper or generate 0.0% return on investment over 90 days.

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

World Copper  vs.  Steppe Gold

World Copper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in World Copper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, World Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Steppe Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steppe Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Steppe Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with World Copper and Steppe Gold

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

The idea behind World Copper and Steppe Gold 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.