Correlation Between Western Copper and Rubicon Organics

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

Diversification Opportunities for Western Copper and Rubicon Organics

-0.13

Correlation Coefficient

Western Copper  Rubicon Organics

Good diversification

The 3 months correlation between Western and Rubicon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics 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 Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Western Copper i.e., Western Copper and Rubicon Organics go up and down completely randomly.

Pair Corralation between Western Copper and Rubicon Organics

Assuming the 90 days trading horizon Western Copper and is expected to generate 0.57 times more return on investment than Rubicon Organics. However, Western Copper and is 1.77 times less risky than Rubicon Organics. It trades about 0.02 of its potential returns per unit of risk. Rubicon Organics is currently generating about -0.09 per unit of risk. If you would invest  156.00  in Western Copper and on August 30, 2024 and sell it today you would earn a total of  1.00  from holding Western Copper and or generate 0.64% return on investment over 90 days.

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

Western Copper and  vs.  Rubicon Organics

Western Copper

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Copper and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Western Copper is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Rubicon Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Organics 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 primary indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Western Copper and Rubicon Organics

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

The idea behind Western Copper and and Rubicon Organics 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.