Correlation Between Pan American and Silver Mines
Can any of the company-specific risk be diversified away by investing in both Pan American and Silver Mines 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 Pan American and Silver Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan American Silver and Silver Mines Limited, you can compare the effects of market volatilities on Pan American and Silver Mines 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 Pan American with a short position of Silver Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan American and Silver Mines.
Diversification Opportunities for Pan American and Silver Mines
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pan and Silver is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pan American Silver and Silver Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Mines Limited and Pan American 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 Pan American Silver are associated (or correlated) with Silver Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Mines Limited has no effect on the direction of Pan American i.e., Pan American and Silver Mines go up and down completely randomly.
Pair Corralation between Pan American and Silver Mines
Assuming the 90 days horizon Pan American Silver is expected to under-perform the Silver Mines. But the stock apears to be less risky and, when comparing its historical volatility, Pan American Silver is 4.3 times less risky than Silver Mines. The stock trades about -0.15 of its potential returns per unit of risk. The Silver Mines Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Silver Mines Limited on December 11, 2024 and sell it today you would lose (0.61) from holding Silver Mines Limited or give up 12.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan American Silver vs. Silver Mines Limited
Performance |
| Timeline |
| Pan American Silver |
| Silver Mines Limited |
Pan American and Silver Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan American and Silver Mines
The main advantage of trading using opposite Pan American and Silver Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan American position performs unexpectedly, Silver Mines 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 Mines will offset losses from the drop in Silver Mines' long position.| Pan American vs. Cairo Communication SpA | Pan American vs. Ribbon Communications | Pan American vs. Comba Telecom Systems | Pan American vs. HK Electric Investments |
| Silver Mines vs. CHIBA BANK | Silver Mines vs. Tianjin Capital Environmental | Silver Mines vs. Xiwang Special Steel | Silver Mines vs. Khiron Life Sciences |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |