Correlation Between Western Copper and KINDER

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

Diversification Opportunities for Western Copper and KINDER

-0.29

Correlation Coefficient

Western Copper  KINDER

Very good diversification

The 3 months correlation between Western and KINDER is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and KINDER MORGAN FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN FIN 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN FIN has no effect on the direction of Western Copper i.e., Western Copper and KINDER go up and down completely randomly.

Pair Corralation between Western Copper and KINDER

Considering the 90-day investment horizon Western Copper and is expected to generate 1.08 times more return on investment than KINDER. However, Western Copper is 1.08 times more volatile than KINDER MORGAN FIN. It trades about 0.08 of its potential returns per unit of risk. KINDER MORGAN FIN is currently generating about 0.07 per unit of risk. If you would invest  101.00  in Western Copper and on December 22, 2024 and sell it today you would earn a total of  12.00  from holding Western Copper and or generate 11.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.33%
Values	Daily Returns

Western Copper and  vs.  KINDER MORGAN FIN

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 6 (%) 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.

KINDER MORGAN FIN

Risk-Adjusted Performance

Modest

Over the last 90 days KINDER MORGAN FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, KINDER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Western Copper and KINDER

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

The idea behind Western Copper and and KINDER MORGAN FIN 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.