Correlation Between Klondike Silver and Defense Metals
Can any of the company-specific risk be diversified away by investing in both Klondike Silver and Defense 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 Klondike Silver and Defense Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klondike Silver Corp and Defense Metals Corp, you can compare the effects of market volatilities on Klondike Silver and Defense 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 Klondike Silver with a short position of Defense Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klondike Silver and Defense Metals.
Diversification Opportunities for Klondike Silver and Defense Metals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Klondike and Defense is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Silver Corp and Defense Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defense Metals Corp and Klondike 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 Klondike Silver Corp are associated (or correlated) with Defense Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defense Metals Corp has no effect on the direction of Klondike Silver i.e., Klondike Silver and Defense Metals go up and down completely randomly.
Pair Corralation between Klondike Silver and Defense Metals
Given the investment horizon of 90 days Klondike Silver is expected to generate 3.2 times less return on investment than Defense Metals. In addition to that, Klondike Silver is 1.95 times more volatile than Defense Metals Corp. It trades about 0.01 of its total potential returns per unit of risk. Defense Metals Corp is currently generating about 0.04 per unit of volatility. If you would invest 20.00 in Defense Metals Corp on October 13, 2024 and sell it today you would earn a total of 1.00 from holding Defense Metals Corp or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klondike Silver Corp vs. Defense Metals Corp
Performance |
| Timeline |
| Klondike Silver Corp |
| Defense Metals Corp |
Klondike Silver and Defense Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klondike Silver and Defense Metals
The main advantage of trading using opposite Klondike Silver and Defense Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klondike Silver position performs unexpectedly, Defense 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 Defense Metals will offset losses from the drop in Defense Metals' long position.| Klondike Silver vs. Silver Grail Resources | Klondike Silver vs. Monarca Minerals | Klondike Silver vs. Gold79 Mines | Klondike Silver vs. Klondike Gold Corp |
| Defense Metals vs. Ucore Rare Metals | Defense Metals vs. Canada Rare Earth | Defense Metals vs. Stillwater Critical Minerals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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