Correlation Between Amazon and SilverCrest Metals
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and SilverCrest Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and SilverCrest Metals, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of SilverCrest Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and SilverCrest Metals.
Diversification Opportunities for Amazon and SilverCrest Metals
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amazon and SilverCrest is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and SilverCrest Metals go up and down completely randomly.
Pair Corralation between Amazon and SilverCrest Metals
Given the investment horizon of 90 days Amazon is expected to generate 3.18 times less return on investment than SilverCrest Metals. But when comparing it to its historical volatility, Amazon Inc is 2.83 times less risky than SilverCrest Metals. It trades about 0.09 of its potential returns per unit of risk. SilverCrest Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 757.00 in SilverCrest Metals on September 12, 2024 and sell it today you would earn a total of 638.00 from holding SilverCrest Metals or generate 84.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 41.48% |
| Values | Daily Returns |
Amazon Inc vs. SilverCrest Metals
Performance |
| Timeline |
| Amazon Inc |
| SilverCrest Metals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Amazon and SilverCrest Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and SilverCrest Metals
The main advantage of trading using opposite Amazon and SilverCrest Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.The idea behind Amazon Inc and SilverCrest Metals 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.| SilverCrest Metals vs. Hong Kong Land | SilverCrest Metals vs. Neometals | SilverCrest Metals vs. Coor Service Management | SilverCrest Metals vs. Fidelity Sustainable USD |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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