Correlation Between Americas Silver and MP Materials
Can any of the company-specific risk be diversified away by investing in both Americas Silver and MP Materials 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 Americas Silver and MP Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Americas Silver Corp and MP Materials Corp, you can compare the effects of market volatilities on Americas Silver and MP Materials 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 Americas Silver with a short position of MP Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americas Silver and MP Materials.
Diversification Opportunities for Americas Silver and MP Materials
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Americas and MP Materials is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Americas Silver Corp and MP Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MP Materials Corp and Americas 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 Americas Silver Corp are associated (or correlated) with MP Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MP Materials Corp has no effect on the direction of Americas Silver i.e., Americas Silver and MP Materials go up and down completely randomly.
Pair Corralation between Americas Silver and MP Materials
Given the investment horizon of 90 days Americas Silver Corp is expected to generate 1.55 times more return on investment than MP Materials. However, Americas Silver is 1.55 times more volatile than MP Materials Corp. It trades about 0.03 of its potential returns per unit of risk. MP Materials Corp is currently generating about 0.0 per unit of risk. If you would invest 41.00 in Americas Silver Corp on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Americas Silver Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Americas Silver Corp vs. MP Materials Corp
Performance |
| Timeline |
| Americas Silver Corp |
| MP Materials Corp |
Americas Silver and MP Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americas Silver and MP Materials
The main advantage of trading using opposite Americas Silver and MP Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americas Silver position performs unexpectedly, MP Materials 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 MP Materials will offset losses from the drop in MP Materials' long position.| Americas Silver vs. MP Materials Corp | Americas Silver vs. NioCorp Developments Ltd | Americas Silver vs. Vale SA ADR | Americas Silver vs. Vizsla Resources Corp |
| MP Materials vs. Piedmont Lithium Ltd | MP Materials vs. Sigma Lithium Resources | MP Materials vs. Standard Lithium | MP Materials vs. Vale SA ADR |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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