Correlation Between Scottie Resources and Hecla Mining

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Can any of the company-specific risk be diversified away by investing in both Scottie Resources and Hecla Mining 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 Scottie Resources and Hecla Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scottie Resources Corp and Hecla Mining, you can compare the effects of market volatilities on Scottie Resources and Hecla Mining 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 Scottie Resources with a short position of Hecla Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottie Resources and Hecla Mining.

Diversification Opportunities for Scottie Resources and Hecla Mining

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Scottie and Hecla is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Scottie Resources Corp and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining and Scottie Resources 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 Scottie Resources Corp are associated (or correlated) with Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Scottie Resources i.e., Scottie Resources and Hecla Mining go up and down completely randomly.

Pair Corralation between Scottie Resources and Hecla Mining

Assuming the 90 days horizon Scottie Resources Corp is expected to generate 2.59 times more return on investment than Hecla Mining. However, Scottie Resources is 2.59 times more volatile than Hecla Mining. It trades about 0.08 of its potential returns per unit of risk. Hecla Mining is currently generating about 0.18 per unit of risk. If you would invest  56.00  in Scottie Resources Corp on October 20, 2024 and sell it today you would earn a total of  4.00  from holding Scottie Resources Corp or generate 7.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Scottie Resources Corp  vs.  Hecla Mining

 Performance 
       Timeline  
Scottie Resources Corp 

Risk-Adjusted Performance

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Over the last 90 days Scottie Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Hecla Mining 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Hecla Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Scottie Resources and Hecla Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Scottie Resources and Hecla Mining

The main advantage of trading using opposite Scottie Resources and Hecla Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottie Resources position performs unexpectedly, Hecla Mining 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 Hecla Mining will offset losses from the drop in Hecla Mining's long position.
The idea behind Scottie Resources Corp and Hecla Mining 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.
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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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