Correlation Between SPTSX Dividend and Getty Copper

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Can any of the company-specific risk be diversified away by investing in both SPTSX Dividend and Getty 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 SPTSX Dividend and Getty Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPTSX Dividend Aristocrats and Getty Copper, you can compare the effects of market volatilities on SPTSX Dividend and Getty 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 SPTSX Dividend with a short position of Getty Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPTSX Dividend and Getty Copper.

Diversification Opportunities for SPTSX Dividend and Getty Copper

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between SPTSX and Getty is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SPTSX Dividend Aristocrats and Getty Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getty Copper and SPTSX Dividend 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 SPTSX Dividend Aristocrats are associated (or correlated) with Getty Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getty Copper has no effect on the direction of SPTSX Dividend i.e., SPTSX Dividend and Getty Copper go up and down completely randomly.
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Pair Corralation between SPTSX Dividend and Getty Copper

Assuming the 90 days trading horizon SPTSX Dividend Aristocrats is expected to under-perform the Getty Copper. But the index apears to be less risky and, when comparing its historical volatility, SPTSX Dividend Aristocrats is 7.47 times less risky than Getty Copper. The index trades about -0.1 of its potential returns per unit of risk. The Getty Copper is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Getty Copper on March 15, 2024 and sell it today you would earn a total of  1.00  from holding Getty Copper or generate 20.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

SPTSX Dividend Aristocrats  vs.  Getty Copper

 Performance 
       Timeline  

SPTSX Dividend and Getty Copper Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPTSX Dividend and Getty Copper

The main advantage of trading using opposite SPTSX Dividend and Getty Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPTSX Dividend position performs unexpectedly, Getty 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 Getty Copper will offset losses from the drop in Getty Copper's long position.
The idea behind SPTSX Dividend Aristocrats and Getty 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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