Correlation Between Aurelia Metals and Silver Spruce
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Silver Spruce 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 Aurelia Metals and Silver Spruce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurelia Metals Limited and Silver Spruce Resources, you can compare the effects of market volatilities on Aurelia Metals and Silver Spruce 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 Aurelia Metals with a short position of Silver Spruce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Silver Spruce.
Diversification Opportunities for Aurelia Metals and Silver Spruce
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aurelia and Silver is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Silver Spruce Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spruce Resources and Aurelia Metals 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 Aurelia Metals Limited are associated (or correlated) with Silver Spruce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spruce Resources has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Silver Spruce go up and down completely randomly.
Pair Corralation between Aurelia Metals and Silver Spruce
Assuming the 90 days horizon Aurelia Metals Limited is expected to generate 0.81 times more return on investment than Silver Spruce. However, Aurelia Metals Limited is 1.24 times less risky than Silver Spruce. It trades about 0.08 of its potential returns per unit of risk. Silver Spruce Resources is currently generating about 0.03 per unit of risk. If you would invest 4.50 in Aurelia Metals Limited on December 11, 2024 and sell it today you would earn a total of 8.50 from holding Aurelia Metals Limited or generate 188.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.72% |
| Values | Daily Returns |
Aurelia Metals Limited vs. Silver Spruce Resources
Performance |
| Timeline |
| Aurelia Metals |
| Silver Spruce Resources |
Aurelia Metals and Silver Spruce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and Silver Spruce
The main advantage of trading using opposite Aurelia Metals and Silver Spruce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, Silver Spruce 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 Silver Spruce will offset losses from the drop in Silver Spruce's long position.| Aurelia Metals vs. Champion Bear Resources | ||
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