Correlation Between Nevada Copper and Bell Copper

Can any of the company-specific risk be diversified away by investing in both Nevada Copper and Bell Copper 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 Nevada Copper and Bell Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nevada Copper Corp and Bell Copper, you can compare the effects of market volatilities on Nevada Copper and Bell Copper 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 Nevada Copper with a short position of Bell Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nevada Copper and Bell Copper.

Diversification Opportunities for Nevada Copper and Bell Copper

0.1

Correlation Coefficient

Nevada Copper  Bell Copper

Average diversification

The 3 months correlation between Nevada and Bell is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nevada Copper Corp and Bell Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Copper and Nevada 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 Nevada Copper Corp are associated (or correlated) with Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper has no effect on the direction of Nevada Copper i.e., Nevada Copper and Bell Copper go up and down completely randomly.

Pair Corralation between Nevada Copper and Bell Copper

Assuming the 90 days horizon Nevada Copper Corp is expected to generate 1.24 times more return on investment than Bell Copper. However, Nevada Copper is 1.24 times more volatile than Bell Copper. It trades about 0.05 of its potential returns per unit of risk. Bell Copper is currently generating about -0.05 per unit of risk. If you would invest  7.00  in Nevada Copper Corp on February 22, 2024 and sell it today you would earn a total of  0.00  from holding Nevada Copper Corp or generate 0.0% return on investment over 90 days.

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

Nevada Copper Corp  vs.  Bell Copper

Nevada Copper Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nevada Copper Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Nevada Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Bell Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bell Copper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bell Copper is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nevada Copper and Bell Copper

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

The idea behind Nevada Copper Corp and Bell Copper 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.