Correlation Between Colonial Coal and Defiance Silver
Can any of the company-specific risk be diversified away by investing in both Colonial Coal and Defiance 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 Colonial Coal and Defiance Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colonial Coal International and Defiance Silver Corp, you can compare the effects of market volatilities on Colonial Coal and Defiance 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 Colonial Coal with a short position of Defiance Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colonial Coal and Defiance Silver.
Diversification Opportunities for Colonial Coal and Defiance Silver
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Colonial and Defiance is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Colonial Coal International and Defiance Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Silver Corp and Colonial Coal 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 Colonial Coal International are associated (or correlated) with Defiance Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Silver Corp has no effect on the direction of Colonial Coal i.e., Colonial Coal and Defiance Silver go up and down completely randomly.
Pair Corralation between Colonial Coal and Defiance Silver
Assuming the 90 days horizon Colonial Coal is expected to generate 1.76 times less return on investment than Defiance Silver. But when comparing it to its historical volatility, Colonial Coal International is 1.66 times less risky than Defiance Silver. It trades about 0.04 of its potential returns per unit of risk. Defiance Silver Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Defiance Silver Corp on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Defiance Silver Corp or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colonial Coal International vs. Defiance Silver Corp
Performance |
| Timeline |
| Colonial Coal Intern |
| Defiance Silver Corp |
Colonial Coal and Defiance Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colonial Coal and Defiance Silver
The main advantage of trading using opposite Colonial Coal and Defiance Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colonial Coal position performs unexpectedly, Defiance 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 Defiance Silver will offset losses from the drop in Defiance Silver's long position.| Colonial Coal vs. Batero Gold Corp | Colonial Coal vs. Bravada Gold | Colonial Coal vs. Black Widow Resources | Colonial Coal vs. Angkor Resources Corp |
| Defiance Silver vs. Minaurum Gold | Defiance Silver vs. Dolly Varden Silver | Defiance Silver vs. AbraSilver Resource Corp | Defiance Silver vs. Santacruz Silv |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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