Correlation Between Western Copper and Mako Mining

Can any of the company-specific risk be diversified away by investing in both Western Copper and Mako Mining 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 Mako Mining 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 Mako Mining Corp, you can compare the effects of market volatilities on Western Copper and Mako Mining 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 Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Mako Mining.

Diversification Opportunities for Western Copper and Mako Mining

-0.08

Correlation Coefficient

Western Copper  Mako Mining

Good diversification

The 3 months correlation between Western and Mako is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp 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 Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Western Copper i.e., Western Copper and Mako Mining go up and down completely randomly.

Pair Corralation between Western Copper and Mako Mining

Assuming the 90 days trading horizon Western Copper and is expected to generate 0.91 times more return on investment than Mako Mining. However, Western Copper and is 1.1 times less risky than Mako Mining. It trades about 0.1 of its potential returns per unit of risk. Mako Mining Corp is currently generating about 0.02 per unit of risk. If you would invest  145.00  in Western Copper and on December 4, 2024 and sell it today you would earn a total of  6.00  from holding Western Copper and or generate 4.14% 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.  Mako Mining Corp

Western Copper

Risk-Adjusted Performance

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.

Mako Mining Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mako Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Copper and Mako Mining

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

The idea behind Western Copper and and Mako Mining Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.