Correlation Between North American and Getty Copper

Can any of the company-specific risk be diversified away by investing in both North American and Getty Copper 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 North American and Getty Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between North American Construction and Getty Copper, you can compare the effects of market volatilities on North American and Getty Copper 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 North American with a short position of Getty Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Getty Copper.

Diversification Opportunities for North American and Getty Copper

-0.8

Correlation Coefficient

North American  Getty Copper

Pay attention - limited upside

The 3 months correlation between North and Getty is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and Getty Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getty Copper and North American 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 North American Construction are associated (or correlated) with Getty Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getty Copper has no effect on the direction of North American i.e., North American and Getty Copper go up and down completely randomly.

Pair Corralation between North American and Getty Copper

Assuming the 90 days trading horizon North American Construction is expected to generate 0.53 times more return on investment than Getty Copper. However, North American Construction is 1.89 times less risky than Getty Copper. It trades about 0.12 of its potential returns per unit of risk. Getty Copper is currently generating about -0.2 per unit of risk. If you would invest  2,482  in North American Construction on September 16, 2024 and sell it today you would earn a total of  483.00  from holding North American Construction or generate 19.46% return on investment over 90 days.

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

North American Construction  vs.  Getty Copper

North American Const

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in North American Construction are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, North American displayed solid returns over the last few months and may actually be approaching a breakup point.

Getty Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getty Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with North American and Getty Copper

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

The idea behind North American Construction and Getty Copper 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.