Correlation Between Hecla Mining and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Hecla Mining and Southern Copper 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 Hecla Mining and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hecla Mining and Southern Copper, you can compare the effects of market volatilities on Hecla Mining and Southern Copper 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 Hecla Mining with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hecla Mining and Southern Copper.
Diversification Opportunities for Hecla Mining and Southern Copper
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hecla and Southern is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and Hecla Mining 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 Hecla Mining are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Hecla Mining i.e., Hecla Mining and Southern Copper go up and down completely randomly.
Pair Corralation between Hecla Mining and Southern Copper
Allowing for the 90-day total investment horizon Hecla Mining is expected to generate 2.84 times less return on investment than Southern Copper. In addition to that, Hecla Mining is 1.42 times more volatile than Southern Copper. It trades about 0.02 of its total potential returns per unit of risk. Southern Copper is currently generating about 0.06 per unit of volatility. If you would invest 5,549 in Southern Copper on August 31, 2024 and sell it today you would earn a total of 4,422 from holding Southern Copper or generate 79.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hecla Mining vs. Southern Copper
Performance |
| Timeline |
| Hecla Mining |
| Southern Copper |
Hecla Mining and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hecla Mining and Southern Copper
The main advantage of trading using opposite Hecla Mining and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hecla Mining position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Hecla Mining vs. SilverCrest Metals | Hecla Mining vs. McEwen Mining | Hecla Mining vs. Avino Silver Gold | Hecla Mining vs. Metalla Royalty Streaming |
| Southern Copper vs. Ero Copper Corp | Southern Copper vs. Hudbay Minerals | Southern Copper vs. Taseko Mines | Southern Copper vs. Amerigo Resources |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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