Correlation Between Western Investment and T2 Metals

Can any of the company-specific risk be diversified away by investing in both Western Investment and T2 Metals 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 Investment and T2 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Western Investment and T2 Metals Corp, you can compare the effects of market volatilities on Western Investment and T2 Metals 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 Investment with a short position of T2 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and T2 Metals.

Diversification Opportunities for Western Investment and T2 Metals

-0.17

Correlation Coefficient

Western Investment  T2 Metals

Good diversification

The 3 months correlation between Western and TWO is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and T2 Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T2 Metals Corp and Western Investment 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 Investment are associated (or correlated) with T2 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T2 Metals Corp has no effect on the direction of Western Investment i.e., Western Investment and T2 Metals go up and down completely randomly.

Pair Corralation between Western Investment and T2 Metals

Given the investment horizon of 90 days Western Investment is expected to generate 0.64 times more return on investment than T2 Metals. However, Western Investment is 1.55 times less risky than T2 Metals. It trades about 0.07 of its potential returns per unit of risk. T2 Metals Corp is currently generating about 0.03 per unit of risk. If you would invest  57.00  in Western Investment on May 7, 2025 and sell it today you would earn a total of  7.00  from holding Western Investment or generate 12.28% return on investment over 90 days.

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

Western Investment  vs.  T2 Metals Corp

Western Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Western Investment showed solid returns over the last few months and may actually be approaching a breakup point.

T2 Metals Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in T2 Metals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, T2 Metals may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Western Investment and T2 Metals

The main advantage of trading using opposite Western Investment and T2 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, T2 Metals 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 T2 Metals will offset losses from the drop in T2 Metals' long position.

The idea behind Western Investment and T2 Metals Corp 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.