Correlation Between Western Copper and Blue Moon
Can any of the company-specific risk be diversified away by investing in both Western Copper and Blue Moon 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 Blue Moon 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 Blue Moon Metals, you can compare the effects of market volatilities on Western Copper and Blue Moon 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 Blue Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Blue Moon.
Diversification Opportunities for Western Copper and Blue Moon
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Blue is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Blue Moon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon Metals 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 Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Metals has no effect on the direction of Western Copper i.e., Western Copper and Blue Moon go up and down completely randomly.
Pair Corralation between Western Copper and Blue Moon
Considering the 90-day investment horizon Western Copper and is expected to under-perform the Blue Moon. But the stock apears to be less risky and, when comparing its historical volatility, Western Copper and is 1.52 times less risky than Blue Moon. The stock trades about -0.1 of its potential returns per unit of risk. The Blue Moon Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Blue Moon Metals on September 25, 2024 and sell it today you would earn a total of 5.00 from holding Blue Moon Metals or generate 25.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Western Copper and vs. Blue Moon Metals
Performance |
Timeline |
Western Copper |
Blue Moon Metals |
Western Copper and Blue Moon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Copper and Blue Moon
The main advantage of trading using opposite Western Copper and Blue Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper position performs unexpectedly, Blue Moon 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 Blue Moon will offset losses from the drop in Blue Moon's long position.Western Copper vs. Vale SA ADR | Western Copper vs. Glencore PLC ADR | Western Copper vs. Piedmont Lithium Ltd | Western Copper vs. Sigma Lithium Resources |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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