Correlation Between Silver Elephant and Nickel Mines
Can any of the company-specific risk be diversified away by investing in both Silver Elephant and Nickel 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 Silver Elephant and Nickel Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Elephant Mining and Nickel Mines Limited, you can compare the effects of market volatilities on Silver Elephant and Nickel 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 Silver Elephant with a short position of Nickel Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Elephant and Nickel Mines.
Diversification Opportunities for Silver Elephant and Nickel Mines
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Silver and Nickel is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Silver Elephant Mining and Nickel Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Mines Limited and Silver Elephant 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 Silver Elephant Mining are associated (or correlated) with Nickel Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Mines Limited has no effect on the direction of Silver Elephant i.e., Silver Elephant and Nickel Mines go up and down completely randomly.
Pair Corralation between Silver Elephant and Nickel Mines
Assuming the 90 days horizon Silver Elephant Mining is expected to generate 2.15 times more return on investment than Nickel Mines. However, Silver Elephant is 2.15 times more volatile than Nickel Mines Limited. It trades about 0.02 of its potential returns per unit of risk. Nickel Mines Limited is currently generating about 0.01 per unit of risk. If you would invest 36.00 in Silver Elephant Mining on August 29, 2024 and sell it today you would lose (8.00) from holding Silver Elephant Mining or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silver Elephant Mining vs. Nickel Mines Limited
Performance |
| Timeline |
| Silver Elephant Mining |
| Nickel Mines Limited |
Silver Elephant and Nickel Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silver Elephant and Nickel Mines
The main advantage of trading using opposite Silver Elephant and Nickel Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Elephant position performs unexpectedly, Nickel 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 Nickel Mines will offset losses from the drop in Nickel Mines' long position.| Silver Elephant vs. Commerce Resources Corp | Silver Elephant vs. Great Western Minerals | Silver Elephant vs. StrikePoint Gold | Silver Elephant vs. Eskay Mining Corp |
| Nickel Mines vs. IGO Limited | Nickel Mines vs. Qubec Nickel Corp | Nickel Mines vs. Mineral Resources Limited | Nickel Mines vs. Surge Copper Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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