Correlation Between Western Copper and Toshiba Tec

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

Diversification Opportunities for Western Copper and Toshiba Tec

-0.05

Correlation Coefficient

Western Copper  Toshiba Tec

Good diversification

The 3 months correlation between Western and Toshiba is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Toshiba Tec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toshiba Tec 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 Toshiba Tec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toshiba Tec has no effect on the direction of Western Copper i.e., Western Copper and Toshiba Tec go up and down completely randomly.

Pair Corralation between Western Copper and Toshiba Tec

Assuming the 90 days trading horizon Western Copper is expected to generate 1.45 times less return on investment than Toshiba Tec. In addition to that, Western Copper is 1.98 times more volatile than Toshiba Tec. It trades about 0.04 of its total potential returns per unit of risk. Toshiba Tec is currently generating about 0.1 per unit of volatility. If you would invest  2,080  in Toshiba Tec on September 13, 2024 and sell it today you would earn a total of  220.00  from holding Toshiba Tec or generate 10.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Western Copper and  vs.  Toshiba Tec

Western Copper

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Copper and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Western Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Toshiba Tec

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Toshiba Tec are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Toshiba Tec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Western Copper and Toshiba Tec

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

The idea behind Western Copper and and Toshiba Tec 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.