Correlation Between Fortuna Silver and SilverCrest Metals
Can any of the company-specific risk be diversified away by investing in both Fortuna Silver and SilverCrest 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 Fortuna Silver and SilverCrest Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortuna Silver Mines and SilverCrest Metals, you can compare the effects of market volatilities on Fortuna Silver and SilverCrest 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 Fortuna Silver with a short position of SilverCrest Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortuna Silver and SilverCrest Metals.
Diversification Opportunities for Fortuna Silver and SilverCrest Metals
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fortuna and SilverCrest is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals and Fortuna Silver 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 Fortuna Silver Mines are associated (or correlated) with SilverCrest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverCrest Metals has no effect on the direction of Fortuna Silver i.e., Fortuna Silver and SilverCrest Metals go up and down completely randomly.
Pair Corralation between Fortuna Silver and SilverCrest Metals
Considering the 90-day investment horizon Fortuna Silver is expected to generate 1.5 times less return on investment than SilverCrest Metals. But when comparing it to its historical volatility, Fortuna Silver Mines is 1.03 times less risky than SilverCrest Metals. It trades about 0.03 of its potential returns per unit of risk. SilverCrest Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 653.00 in SilverCrest Metals on September 2, 2024 and sell it today you would earn a total of 364.00 from holding SilverCrest Metals or generate 55.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortuna Silver Mines vs. SilverCrest Metals
Performance |
| Timeline |
| Fortuna Silver Mines |
| SilverCrest Metals |
Fortuna Silver and SilverCrest Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortuna Silver and SilverCrest Metals
The main advantage of trading using opposite Fortuna Silver and SilverCrest Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortuna Silver position performs unexpectedly, SilverCrest 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 SilverCrest Metals will offset losses from the drop in SilverCrest Metals' long position.| Fortuna Silver vs. Fortitude Gold Corp | Fortuna Silver vs. New Gold | Fortuna Silver vs. Galiano Gold | Fortuna Silver vs. GoldMining |
| SilverCrest Metals vs. Hecla Mining | SilverCrest Metals vs. McEwen Mining | SilverCrest Metals vs. Endeavour Silver Corp | SilverCrest Metals vs. New Pacific Metals |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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