Correlation Between Western Copper and SunOpta

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

Diversification Opportunities for Western Copper and SunOpta

0.14

Correlation Coefficient

Western Copper  SunOpta

Average diversification

The 3 months correlation between Western and SunOpta is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Western Copper i.e., Western Copper and SunOpta go up and down completely randomly.

Pair Corralation between Western Copper and SunOpta

Considering the 90-day investment horizon Western Copper and is expected to generate 1.01 times more return on investment than SunOpta. However, Western Copper is 1.01 times more volatile than SunOpta. It trades about 0.09 of its potential returns per unit of risk. SunOpta is currently generating about -0.2 per unit of risk. If you would invest  101.00  in Western Copper and on December 21, 2024 and sell it today you would earn a total of  14.00  from holding Western Copper and or generate 13.86% return on investment over 90 days.

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

Western Copper and  vs.  SunOpta

Western Copper

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Copper and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Western Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

SunOpta

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Western Copper and SunOpta

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

The idea behind Western Copper and and SunOpta 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.