Correlation Between Western Copper and Semtech

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

Diversification Opportunities for Western Copper and Semtech

-0.24

Correlation Coefficient

Western Copper  Semtech

Very good diversification

The 3 months correlation between Western and Semtech is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech 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 Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Western Copper i.e., Western Copper and Semtech go up and down completely randomly.

Pair Corralation between Western Copper and Semtech

Considering the 90-day investment horizon Western Copper and is expected to under-perform the Semtech. But the stock apears to be less risky and, when comparing its historical volatility, Western Copper and is 1.47 times less risky than Semtech. The stock trades about -0.02 of its potential returns per unit of risk. The Semtech is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,248  in Semtech on September 4, 2024 and sell it today you would earn a total of  2,447  from holding Semtech or generate 57.6% 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.  Semtech

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.

Semtech

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Copper and Semtech

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

The idea behind Western Copper and and Semtech 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 Commodity Directory module to find actively traded commodities issued by global exchanges.