Correlation Between Metals Creek and Silver Dollar
Can any of the company-specific risk be diversified away by investing in both Metals Creek and Silver Dollar 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 Metals Creek and Silver Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals Creek Resources and Silver Dollar Resources, you can compare the effects of market volatilities on Metals Creek and Silver Dollar 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 Metals Creek with a short position of Silver Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Creek and Silver Dollar.
Diversification Opportunities for Metals Creek and Silver Dollar
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metals and Silver is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Metals Creek Resources and Silver Dollar Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Dollar Resources and Metals Creek 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 Metals Creek Resources are associated (or correlated) with Silver Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Dollar Resources has no effect on the direction of Metals Creek i.e., Metals Creek and Silver Dollar go up and down completely randomly.
Pair Corralation between Metals Creek and Silver Dollar
Assuming the 90 days horizon Metals Creek Resources is not expected to generate positive returns. Moreover, Metals Creek is 4.14 times more volatile than Silver Dollar Resources. It trades away all of its potential returns to assume current level of volatility. Silver Dollar Resources is currently generating about -0.27 per unit of risk. If you would invest 3.00 in Metals Creek Resources on August 25, 2024 and sell it today you would lose (1.00) from holding Metals Creek Resources or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals Creek Resources vs. Silver Dollar Resources
Performance |
| Timeline |
| Metals Creek Resources |
| Silver Dollar Resources |
Metals Creek and Silver Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals Creek and Silver Dollar
The main advantage of trading using opposite Metals Creek and Silver Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Creek position performs unexpectedly, Silver Dollar 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 Silver Dollar will offset losses from the drop in Silver Dollar's long position.| Metals Creek vs. Grizzly Discoveries | Metals Creek vs. Greenland Minerals And | Metals Creek vs. First Energy Metals | Metals Creek vs. C3 Metals |
| Silver Dollar vs. Norra Metals Corp | Silver Dollar vs. Amarc Resources | Silver Dollar vs. ZincX Resources Corp | Silver Dollar vs. Nuinsco Resources Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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