Correlation Between Dolly Varden and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both Dolly Varden 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 Dolly Varden and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dolly Varden Silver and Silvercorp Metals, you can compare the effects of market volatilities on Dolly Varden 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 Dolly Varden with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolly Varden and Silvercorp Metals.
Diversification Opportunities for Dolly Varden and Silvercorp Metals
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dolly and Silvercorp is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dolly Varden Silver and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and Dolly Varden 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 Dolly Varden Silver 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 Dolly Varden i.e., Dolly Varden and Silvercorp Metals go up and down completely randomly.
Pair Corralation between Dolly Varden and Silvercorp Metals
Assuming the 90 days horizon Dolly Varden Silver is expected to generate 0.79 times more return on investment than Silvercorp Metals. However, Dolly Varden Silver is 1.27 times less risky than Silvercorp Metals. It trades about -0.34 of its potential returns per unit of risk. Silvercorp Metals is currently generating about -0.42 per unit of risk. If you would invest 98.00 in Dolly Varden Silver on August 28, 2024 and sell it today you would lose (21.00) from holding Dolly Varden Silver or give up 21.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dolly Varden Silver vs. Silvercorp Metals
Performance |
| Timeline |
| Dolly Varden Silver |
| Silvercorp Metals |
Dolly Varden and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolly Varden and Silvercorp Metals
The main advantage of trading using opposite Dolly Varden and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolly Varden 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.| Dolly Varden vs. Arizona Silver Exploration | Dolly Varden vs. Silver Hammer Mining | Dolly Varden vs. Reyna Silver Corp | Dolly Varden vs. Guanajuato 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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