Correlation Between Canadian Spirit and Western Copper

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

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

Diversification Opportunities for Canadian Spirit and Western Copper

0.0

Correlation Coefficient

Canadian Spirit  Western Copper

Pay attention - limited upside

The 3 months correlation between Canadian and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Spirit Resources and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Canadian Spirit 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 Canadian Spirit Resources are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Canadian Spirit i.e., Canadian Spirit and Western Copper go up and down completely randomly.

Pair Corralation between Canadian Spirit and Western Copper

If you would invest (100.00) in Canadian Spirit Resources on March 13, 2024 and sell it today you would earn a total of  100.00  from holding Canadian Spirit Resources or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Canadian Spirit Resources  vs.  Western Copper and

Canadian Spirit Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Spirit Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Canadian Spirit is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Canadian Spirit and Western Copper

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

The idea behind Canadian Spirit Resources and Western Copper and 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.