Correlation Between Silver Dollar and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Silver Dollar and Eramet SA 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 Dollar and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Dollar Resources and Eramet SA ADR, you can compare the effects of market volatilities on Silver Dollar and Eramet SA 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 Dollar with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Dollar and Eramet SA.
Diversification Opportunities for Silver Dollar and Eramet SA
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Silver and Eramet is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Silver Dollar Resources and Eramet SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA ADR and Silver Dollar 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 Dollar Resources are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA ADR has no effect on the direction of Silver Dollar i.e., Silver Dollar and Eramet SA go up and down completely randomly.
Pair Corralation between Silver Dollar and Eramet SA
Assuming the 90 days horizon Silver Dollar Resources is expected to under-perform the Eramet SA. In addition to that, Silver Dollar is 1.23 times more volatile than Eramet SA ADR. It trades about -0.3 of its total potential returns per unit of risk. Eramet SA ADR is currently generating about -0.11 per unit of volatility. If you would invest 566.00 in Eramet SA ADR on September 1, 2024 and sell it today you would lose (46.00) from holding Eramet SA ADR or give up 8.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Silver Dollar Resources vs. Eramet SA ADR
Performance |
| Timeline |
| Silver Dollar Resources |
| Eramet SA ADR |
Silver Dollar and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silver Dollar and Eramet SA
The main advantage of trading using opposite Silver Dollar and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Dollar position performs unexpectedly, Eramet SA 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 Eramet SA will offset losses from the drop in Eramet SA's long position.| Silver Dollar vs. O3 Mining | Silver Dollar vs. Aftermath Silver | Silver Dollar vs. Nevada King Gold | Silver Dollar vs. Canstar Resources |
| Eramet SA vs. IGO Limited | Eramet SA vs. Nickel Mines Limited | Eramet SA vs. IGO Limited | Eramet SA vs. Edison Cobalt 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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