Correlation Between Sun Summit and Searchlight Resources
Can any of the company-specific risk be diversified away by investing in both Sun Summit and Searchlight 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 Sun Summit and Searchlight Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Summit Minerals and Searchlight Resources, you can compare the effects of market volatilities on Sun Summit and Searchlight 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 Sun Summit with a short position of Searchlight Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Summit and Searchlight Resources.
Diversification Opportunities for Sun Summit and Searchlight Resources
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sun and Searchlight is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sun Summit Minerals and Searchlight Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Resources and Sun Summit 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 Sun Summit Minerals are associated (or correlated) with Searchlight Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Resources has no effect on the direction of Sun Summit i.e., Sun Summit and Searchlight Resources go up and down completely randomly.
Pair Corralation between Sun Summit and Searchlight Resources
Assuming the 90 days horizon Sun Summit Minerals is expected to under-perform the Searchlight Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Sun Summit Minerals is 1.86 times less risky than Searchlight Resources. The otc stock trades about -0.21 of its potential returns per unit of risk. The Searchlight Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.51 in Searchlight Resources on August 28, 2024 and sell it today you would lose (0.08) from holding Searchlight Resources or give up 15.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Summit Minerals vs. Searchlight Resources
Performance |
| Timeline |
| Sun Summit Minerals |
| Searchlight Resources |
Sun Summit and Searchlight Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Summit and Searchlight Resources
The main advantage of trading using opposite Sun Summit and Searchlight Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Summit position performs unexpectedly, Searchlight 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 Searchlight Resources will offset losses from the drop in Searchlight Resources' long position.| Sun Summit vs. Ascendant Resources | Sun Summit vs. Cantex Mine Development | Sun Summit vs. Amarc Resources | Sun Summit vs. Sterling Metals 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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