Correlation Between American Homes and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both American Homes and Silvercorp Metals 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 American Homes and Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and Silvercorp Metals, you can compare the effects of market volatilities on American Homes and Silvercorp Metals 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 American Homes with a short position of Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Silvercorp Metals.
Diversification Opportunities for American Homes and Silvercorp Metals
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Silvercorp is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and American Homes 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 American Homes 4 are associated (or correlated) with Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of American Homes i.e., American Homes and Silvercorp Metals go up and down completely randomly.
Pair Corralation between American Homes and Silvercorp Metals
Assuming the 90 days trading horizon American Homes is expected to generate 3.17 times less return on investment than Silvercorp Metals. But when comparing it to its historical volatility, American Homes 4 is 2.68 times less risky than Silvercorp Metals. It trades about 0.03 of its potential returns per unit of risk. Silvercorp Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 361.00 in Silvercorp Metals on October 5, 2024 and sell it today you would earn a total of 79.00 from holding Silvercorp Metals or generate 21.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.91% |
Values | Daily Returns |
American Homes 4 vs. Silvercorp Metals
Performance |
Timeline |
American Homes 4 |
Silvercorp Metals |
American Homes and Silvercorp Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Homes and Silvercorp Metals
The main advantage of trading using opposite American Homes and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Silvercorp Metals 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 Silvercorp Metals will offset losses from the drop in Silvercorp Metals' long position.American Homes vs. Livermore Investments Group | American Homes vs. Vietnam Enterprise Investments | American Homes vs. Roadside Real Estate | American Homes vs. Primorus Investments plc |
Silvercorp Metals vs. Moneta Money Bank | Silvercorp Metals vs. Eastinco Mining Exploration | Silvercorp Metals vs. Regions Financial Corp | Silvercorp Metals vs. Invesco Physical Silver |
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..
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |