Correlation Between First Tin and SilverCrest Metals
Can any of the company-specific risk be diversified away by investing in both First Tin and SilverCrest 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 First Tin and SilverCrest Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Tin PLC and SilverCrest Metals, you can compare the effects of market volatilities on First Tin and SilverCrest 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 First Tin with a short position of SilverCrest Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Tin and SilverCrest Metals.
Diversification Opportunities for First Tin and SilverCrest Metals
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and SilverCrest is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Tin PLC and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals and First Tin 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 First Tin PLC are associated (or correlated) with SilverCrest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverCrest Metals has no effect on the direction of First Tin i.e., First Tin and SilverCrest Metals go up and down completely randomly.
Pair Corralation between First Tin and SilverCrest Metals
Assuming the 90 days trading horizon First Tin PLC is expected to under-perform the SilverCrest Metals. But the stock apears to be less risky and, when comparing its historical volatility, First Tin PLC is 1.42 times less risky than SilverCrest Metals. The stock trades about -0.02 of its potential returns per unit of risk. The SilverCrest Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 807.00 in SilverCrest Metals on September 2, 2024 and sell it today you would earn a total of 614.00 from holding SilverCrest Metals or generate 76.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 41.28% |
| Values | Daily Returns |
First Tin PLC vs. SilverCrest Metals
Performance |
| Timeline |
| First Tin PLC |
| SilverCrest Metals |
First Tin and SilverCrest Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Tin and SilverCrest Metals
The main advantage of trading using opposite First Tin and SilverCrest Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Tin position performs unexpectedly, SilverCrest 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 SilverCrest Metals will offset losses from the drop in SilverCrest Metals' long position.| First Tin vs. SilverCrest Metals | First Tin vs. International Biotechnology Trust | First Tin vs. Hochschild Mining plc | First Tin vs. Silvercorp Metals |
| SilverCrest Metals vs. Uniper SE | SilverCrest Metals vs. Mulberry Group PLC | SilverCrest Metals vs. London Security Plc | SilverCrest Metals vs. Triad Group PLC |
Check out your portfolio center.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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