Correlation Between BHP Group and Americas Silver
Can any of the company-specific risk be diversified away by investing in both BHP Group and Americas Silver 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 Americas Silver 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 Americas Silver Corp, you can compare the effects of market volatilities on BHP Group and Americas Silver 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 Americas Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Americas Silver.
Diversification Opportunities for BHP Group and Americas Silver
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BHP and Americas is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Americas Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americas Silver Corp 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 Americas Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americas Silver Corp has no effect on the direction of BHP Group i.e., BHP Group and Americas Silver go up and down completely randomly.
Pair Corralation between BHP Group and Americas Silver
Considering the 90-day investment horizon BHP Group Limited is expected to under-perform the Americas Silver. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 3.33 times less risky than Americas Silver. The stock trades about -0.18 of its potential returns per unit of risk. The Americas Silver Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Americas Silver Corp on September 3, 2024 and sell it today you would lose (1.00) from holding Americas Silver Corp or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Americas Silver Corp
Performance |
| Timeline |
| BHP Group Limited |
| Americas Silver Corp |
BHP Group and Americas Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Americas Silver
The main advantage of trading using opposite BHP Group and Americas Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Americas Silver 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 Americas Silver will offset losses from the drop in Americas Silver'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 |
| Americas Silver vs. Arizona Lithium Limited | Americas Silver vs. SPACE | Americas Silver vs. Bayview Acquisition Corp | Americas Silver vs. T Rowe Price |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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