Correlation Between Western Copper and Altius Minerals

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

Diversification Opportunities for Western Copper and Altius Minerals

0.91

Correlation Coefficient

Western Copper  Altius Minerals

Almost no diversification

The 3 months correlation between Western and Altius is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Altius Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altius Minerals 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 Altius Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altius Minerals has no effect on the direction of Western Copper i.e., Western Copper and Altius Minerals go up and down completely randomly.

Pair Corralation between Western Copper and Altius Minerals

Assuming the 90 days trading horizon Western Copper is expected to generate 1.58 times less return on investment than Altius Minerals. In addition to that, Western Copper is 1.94 times more volatile than Altius Minerals. It trades about 0.08 of its total potential returns per unit of risk. Altius Minerals is currently generating about 0.24 per unit of volatility. If you would invest  2,055  in Altius Minerals on January 28, 2024 and sell it today you would earn a total of  150.00  from holding Altius Minerals or generate 7.3% return on investment over 90 days.

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

Western Copper and  vs.  Altius Minerals

Western Copper

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Copper and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Western Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Altius Minerals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altius Minerals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Altius Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Copper and Altius Minerals

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

The idea behind Western Copper and and Altius Minerals 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.