Correlation Between SilverCrest Metals and GoGold Resources

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

Diversification Opportunities for SilverCrest Metals and GoGold Resources

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between SilverCrest and GoGold is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and SilverCrest Metals 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 SilverCrest Metals are associated (or correlated) with GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and GoGold Resources go up and down completely randomly.

Pair Corralation between SilverCrest Metals and GoGold Resources

Assuming the 90 days trading horizon SilverCrest Metals is expected to generate 0.94 times more return on investment than GoGold Resources. However, SilverCrest Metals is 1.07 times less risky than GoGold Resources. It trades about 0.11 of its potential returns per unit of risk. GoGold Resources is currently generating about 0.04 per unit of risk. If you would invest  1,131  in SilverCrest Metals on August 29, 2024 and sell it today you would earn a total of  274.00  from holding SilverCrest Metals or generate 24.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

SilverCrest Metals  vs.  GoGold Resources

 Performance 
       Timeline  
SilverCrest Metals 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SilverCrest Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, SilverCrest Metals displayed solid returns over the last few months and may actually be approaching a breakup point.
GoGold Resources 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in GoGold Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, GoGold Resources may actually be approaching a critical reversion point that can send shares even higher in December 2024.

SilverCrest Metals and GoGold Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SilverCrest Metals and GoGold Resources

The main advantage of trading using opposite SilverCrest Metals and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SilverCrest Metals position performs unexpectedly, GoGold Resources 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.
The idea behind SilverCrest Metals and GoGold Resources 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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