Correlation Between BTU Metals and Fortuna Silver
Can any of the company-specific risk be diversified away by investing in both BTU Metals and Fortuna 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 BTU Metals and Fortuna Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTU Metals Corp and Fortuna Silver Mines, you can compare the effects of market volatilities on BTU Metals and Fortuna 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 BTU Metals with a short position of Fortuna Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and Fortuna Silver.
Diversification Opportunities for BTU Metals and Fortuna Silver
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BTU and Fortuna is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines and BTU 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 BTU Metals Corp are associated (or correlated) with Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of BTU Metals i.e., BTU Metals and Fortuna Silver go up and down completely randomly.
Pair Corralation between BTU Metals and Fortuna Silver
Assuming the 90 days horizon BTU Metals Corp is expected to generate 2.89 times more return on investment than Fortuna Silver. However, BTU Metals is 2.89 times more volatile than Fortuna Silver Mines. It trades about 0.02 of its potential returns per unit of risk. Fortuna Silver Mines is currently generating about -0.05 per unit of risk. If you would invest 2.50 in BTU Metals Corp on September 1, 2024 and sell it today you would lose (0.45) from holding BTU Metals Corp or give up 18.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
BTU Metals Corp vs. Fortuna Silver Mines
Performance |
| Timeline |
| BTU Metals Corp |
| Fortuna Silver Mines |
BTU Metals and Fortuna Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTU Metals and Fortuna Silver
The main advantage of trading using opposite BTU Metals and Fortuna Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals position performs unexpectedly, Fortuna 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 Fortuna Silver will offset losses from the drop in Fortuna Silver's long position.| BTU Metals vs. Alaska Air Group | BTU Metals vs. Xtant Medical Holdings | BTU Metals vs. Westinghouse Air Brake | BTU Metals vs. AerSale Corp |
| Fortuna Silver vs. Pan American Silver | Fortuna Silver vs. Harmony Gold Mining | Fortuna Silver vs. IAMGold | Fortuna Silver vs. Kinross Gold |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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