Correlation Between Klondike Silver and Kootenay Silver
Can any of the company-specific risk be diversified away by investing in both Klondike Silver and Kootenay Silver 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 Kootenay Silver 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 Kootenay Silver, you can compare the effects of market volatilities on Klondike Silver and Kootenay Silver 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 Kootenay Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klondike Silver and Kootenay Silver.
Diversification Opportunities for Klondike Silver and Kootenay Silver
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Klondike and Kootenay is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Silver Corp and Kootenay Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kootenay Silver 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 Kootenay Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kootenay Silver has no effect on the direction of Klondike Silver i.e., Klondike Silver and Kootenay Silver go up and down completely randomly.
Pair Corralation between Klondike Silver and Kootenay Silver
Given the investment horizon of 90 days Klondike Silver Corp is expected to under-perform the Kootenay Silver. In addition to that, Klondike Silver is 2.16 times more volatile than Kootenay Silver. It trades about -0.16 of its total potential returns per unit of risk. Kootenay Silver is currently generating about -0.31 per unit of volatility. If you would invest 144.00 in Kootenay Silver on August 28, 2024 and sell it today you would lose (37.00) from holding Kootenay Silver or give up 25.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klondike Silver Corp vs. Kootenay Silver
Performance |
| Timeline |
| Klondike Silver Corp |
| Kootenay Silver |
Klondike Silver and Kootenay Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klondike Silver and Kootenay Silver
The main advantage of trading using opposite Klondike Silver and Kootenay Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klondike Silver position performs unexpectedly, Kootenay Silver 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 Kootenay Silver will offset losses from the drop in Kootenay Silver's long position.The idea behind Klondike Silver Corp and Kootenay Silver pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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