Correlation Between Western Copper and Evertz Technologies

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

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

Diversification Opportunities for Western Copper and Evertz Technologies

-0.27

Correlation Coefficient

Western Copper  Evertz Technologies

Very good diversification

The 3 months correlation between Western and Evertz is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies and Western 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 Western Copper and are associated (or correlated) with Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Western Copper i.e., Western Copper and Evertz Technologies go up and down completely randomly.

Pair Corralation between Western Copper and Evertz Technologies

Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Evertz Technologies. In addition to that, Western Copper is 1.21 times more volatile than Evertz Technologies Limited. It trades about -0.25 of its total potential returns per unit of risk. Evertz Technologies Limited is currently generating about 0.06 per unit of volatility. If you would invest  1,207  in Evertz Technologies Limited on September 17, 2024 and sell it today you would earn a total of  14.00  from holding Evertz Technologies Limited or generate 1.16% return on investment over 90 days.

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

Western Copper and  vs.  Evertz Technologies Limited

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 very healthy basic indicators, Western Copper is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Evertz Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evertz Technologies Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evertz Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Western Copper and Evertz Technologies

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

The idea behind Western Copper and and Evertz Technologies Limited 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.