Correlation Between Cleveland Cliffs and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and Silvercorp Metals 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 Cleveland Cliffs and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleveland Cliffs and Silvercorp Metals, you can compare the effects of market volatilities on Cleveland Cliffs and Silvercorp Metals 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 Cleveland Cliffs with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Silvercorp Metals.
Diversification Opportunities for Cleveland Cliffs and Silvercorp Metals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cleveland and Silvercorp is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Cleveland Cliffs 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 Cleveland Cliffs are associated (or correlated) with Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and Silvercorp Metals go up and down completely randomly.
Pair Corralation between Cleveland Cliffs and Silvercorp Metals
Considering the 90-day investment horizon Cleveland Cliffs is expected to under-perform the Silvercorp Metals. But the stock apears to be less risky and, when comparing its historical volatility, Cleveland Cliffs is 1.08 times less risky than Silvercorp Metals. The stock trades about -0.06 of its potential returns per unit of risk. The Silvercorp Metals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 387.00 in Silvercorp Metals on August 31, 2024 and sell it today you would lose (58.00) from holding Silvercorp Metals or give up 14.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cleveland Cliffs vs. Silvercorp Metals
Performance |
| Timeline |
| Cleveland Cliffs |
| Silvercorp Metals |
Cleveland Cliffs and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cleveland Cliffs and Silvercorp Metals
The main advantage of trading using opposite Cleveland Cliffs and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs position performs unexpectedly, Silvercorp Metals 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 Silvercorp Metals will offset losses from the drop in Silvercorp Metals' long position.| Cleveland Cliffs vs. Nucor Corp | Cleveland Cliffs vs. Steel Dynamics | Cleveland Cliffs vs. ArcelorMittal SA ADR | Cleveland Cliffs vs. Gerdau SA ADR |
| Silvercorp Metals vs. Endeavour Silver Corp | Silvercorp Metals vs. Fortuna Silver Mines | Silvercorp Metals vs. Pan American Silver | Silvercorp Metals vs. First Majestic Silver |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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