Correlation Between Silver Mines and Pan American
Can any of the company-specific risk be diversified away by investing in both Silver Mines and Pan American 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 Mines and Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Mines Limited and Pan American Silver, you can compare the effects of market volatilities on Silver Mines and Pan American 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 Mines with a short position of Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Mines and Pan American.
Diversification Opportunities for Silver Mines and Pan American
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Silver and Pan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Silver Mines Limited and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver and Silver Mines 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 Mines Limited are associated (or correlated) with Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of Silver Mines i.e., Silver Mines and Pan American go up and down completely randomly.
Pair Corralation between Silver Mines and Pan American
Assuming the 90 days horizon Silver Mines Limited is expected to under-perform the Pan American. In addition to that, Silver Mines is 2.22 times more volatile than Pan American Silver. It trades about -0.11 of its total potential returns per unit of risk. Pan American Silver is currently generating about -0.11 per unit of volatility. If you would invest 2,181 in Pan American Silver on September 23, 2024 and sell it today you would lose (179.00) from holding Pan American Silver or give up 8.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silver Mines Limited vs. Pan American Silver
Performance |
| Timeline |
| Silver Mines Limited |
| Pan American Silver |
Silver Mines and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silver Mines and Pan American
The main advantage of trading using opposite Silver Mines and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Mines position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| Silver Mines vs. Pan American Silver | Silver Mines vs. First Majestic Silver | Silver Mines vs. MAG Silver Corp | Silver Mines vs. Silvercorp Metals |
| Pan American vs. First Majestic Silver | Pan American vs. MAG Silver Corp | Pan American vs. Silvercorp Metals | Pan American vs. Endeavour Silver 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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