Correlation Between Western Copper and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Western Copper and NYSE Composite 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 NYSE Composite 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 NYSE Composite, you can compare the effects of market volatilities on Western Copper and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and NYSE Composite.
Diversification Opportunities for Western Copper and NYSE Composite
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and NYSE is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Western Copper i.e., Western Copper and NYSE Composite go up and down completely randomly.
Pair Corralation between Western Copper and NYSE Composite
Considering the 90-day investment horizon Western Copper and is expected to under-perform the NYSE Composite. In addition to that, Western Copper is 4.34 times more volatile than NYSE Composite. It trades about -0.02 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.09 per unit of volatility. If you would invest 1,476,437 in NYSE Composite on November 30, 2024 and sell it today you would earn a total of 504,378 from holding NYSE Composite or generate 34.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Western Copper and vs. NYSE Composite
Performance |
Timeline |
Western Copper and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Western Copper and
Pair trading matchups for Western Copper
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Western Copper and NYSE Composite
The main advantage of trading using opposite Western Copper and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Western Copper vs. Fury Gold Mines | ||
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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