Correlation Between Western Copper and Triton International

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

Diversification Opportunities for Western Copper and Triton International

0.45

Correlation Coefficient

Western Copper  Triton International

Very weak diversification

The 3 months correlation between Western and Triton is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International 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 Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of Western Copper i.e., Western Copper and Triton International go up and down completely randomly.

Pair Corralation between Western Copper and Triton International

Considering the 90-day investment horizon Western Copper is expected to generate 10.81 times less return on investment than Triton International. In addition to that, Western Copper is 2.46 times more volatile than Triton International Limited. It trades about 0.0 of its total potential returns per unit of risk. Triton International Limited is currently generating about 0.09 per unit of volatility. If you would invest  2,098  in Triton International Limited on September 3, 2024 and sell it today you would earn a total of  132.00  from holding Triton International Limited or generate 6.29% return on investment over 90 days.

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

Western Copper and  vs.  Triton International Limited

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.

Triton International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Triton International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Western Copper and Triton International

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

The idea behind Western Copper and and Triton International Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..