Correlation Between BHP Group and Silver Elephant
Can any of the company-specific risk be diversified away by investing in both BHP Group and Silver Elephant 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 BHP Group and Silver Elephant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Silver Elephant Mining, you can compare the effects of market volatilities on BHP Group and Silver Elephant 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 BHP Group with a short position of Silver Elephant. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Silver Elephant.
Diversification Opportunities for BHP Group and Silver Elephant
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BHP and Silver is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Silver Elephant Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Elephant Mining and BHP Group 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 BHP Group Limited are associated (or correlated) with Silver Elephant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Elephant Mining has no effect on the direction of BHP Group i.e., BHP Group and Silver Elephant go up and down completely randomly.
Pair Corralation between BHP Group and Silver Elephant
Considering the 90-day investment horizon BHP Group Limited is expected to generate 0.16 times more return on investment than Silver Elephant. However, BHP Group Limited is 6.22 times less risky than Silver Elephant. It trades about 0.07 of its potential returns per unit of risk. Silver Elephant Mining is currently generating about -0.15 per unit of risk. If you would invest 4,849 in BHP Group Limited on November 5, 2024 and sell it today you would earn a total of 66.00 from holding BHP Group Limited or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
BHP Group Limited vs. Silver Elephant Mining
Performance |
| Timeline |
| BHP Group Limited |
| Silver Elephant Mining |
BHP Group and Silver Elephant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Silver Elephant
The main advantage of trading using opposite BHP Group and Silver Elephant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Silver Elephant 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 Elephant will offset losses from the drop in Silver Elephant's long position.| BHP Group vs. Vale SA ADR | BHP Group vs. Teck Resources Ltd | BHP Group vs. Lithium Americas Corp | BHP Group vs. MP Materials Corp |
| Silver Elephant vs. Commerce Resources Corp | Silver Elephant vs. Great Western Minerals | Silver Elephant vs. StrikePoint Gold | Silver Elephant vs. Eskay Mining Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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