Correlation Between Springwater Special and Western Copper

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

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

Diversification Opportunities for Springwater Special and Western Copper

0.35

Correlation Coefficient

Springwater Special  Western Copper

Weak diversification

The 3 months correlation between Springwater and Western is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Springwater Special Situations and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Springwater Special 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 Springwater Special Situations are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Springwater Special i.e., Springwater Special and Western Copper go up and down completely randomly.

Pair Corralation between Springwater Special and Western Copper

If you would invest  1,023  in Springwater Special Situations on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Springwater Special Situations or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Springwater Special Situations  vs.  Western Copper and

Springwater Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Springwater Special Situations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Springwater Special is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Western Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Western Copper is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Springwater Special and Western Copper

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

The idea behind Springwater Special Situations and Western Copper and 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 Stocks Directory module to find actively traded stocks across global markets.