Correlation Between Western Copper and United Homes

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

Diversification Opportunities for Western Copper and United Homes

0.29

Correlation Coefficient

Western Copper  United Homes

Modest diversification

The 3 months correlation between Western and United is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and United Homes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Homes Group 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 United Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Homes Group has no effect on the direction of Western Copper i.e., Western Copper and United Homes go up and down completely randomly.

Pair Corralation between Western Copper and United Homes

Considering the 90-day investment horizon Western Copper and is expected to generate 0.41 times more return on investment than United Homes. However, Western Copper and is 2.44 times less risky than United Homes. It trades about -0.39 of its potential returns per unit of risk. United Homes Group is currently generating about -0.23 per unit of risk. If you would invest  129.00  in Western Copper and on September 16, 2024 and sell it today you would lose (24.00) from holding Western Copper and or give up 18.6% of portfolio value over 90 days.

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

Western Copper and  vs.  United Homes Group

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

United Homes Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Homes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Western Copper and United Homes

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

The idea behind Western Copper and and United Homes Group 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..