Correlation Between Summa Silver and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Summa Silver and FARO Technologies 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 Summa Silver and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summa Silver Corp and FARO Technologies, you can compare the effects of market volatilities on Summa Silver and FARO Technologies 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 Summa Silver with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and FARO Technologies.
Diversification Opportunities for Summa Silver and FARO Technologies
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summa and FARO is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and Summa Silver 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 Summa Silver Corp are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Summa Silver i.e., Summa Silver and FARO Technologies go up and down completely randomly.
Pair Corralation between Summa Silver and FARO Technologies
Assuming the 90 days horizon Summa Silver Corp is expected to under-perform the FARO Technologies. But the otc stock apears to be less risky and, when comparing its historical volatility, Summa Silver Corp is 2.19 times less risky than FARO Technologies. The otc stock trades about -0.42 of its potential returns per unit of risk. The FARO Technologies is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,808 in FARO Technologies on August 23, 2024 and sell it today you would earn a total of 822.00 from holding FARO Technologies or generate 45.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summa Silver Corp vs. FARO Technologies
Performance |
| Timeline |
| Summa Silver Corp |
| FARO Technologies |
Summa Silver and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summa Silver and FARO Technologies
The main advantage of trading using opposite Summa Silver and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summa Silver position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| Summa Silver vs. Defiance Silver Corp | Summa Silver vs. Alien Metals | Summa Silver vs. ABIVAX Socit Anonyme | Summa Silver vs. SCOR PK |
| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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