Correlation Between SilverCrest Metals and Bank of Ireland Group PLC

Can any of the company-specific risk be diversified away by investing in both SilverCrest Metals and Bank of Ireland Group PLC 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 SilverCrest Metals and Bank of Ireland Group PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SilverCrest Metals and Bank of Ireland, you can compare the effects of market volatilities on SilverCrest Metals and Bank of Ireland Group PLC 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 SilverCrest Metals with a short position of Bank of Ireland Group PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SilverCrest Metals and Bank of Ireland Group PLC.

Diversification Opportunities for SilverCrest Metals and Bank of Ireland Group PLC

-0.27

Correlation Coefficient

SilverCrest Metals  Bank of Ireland Group PLC

Very good diversification

The 3 months correlation between SilverCrest and Bank is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland Group PLC and SilverCrest Metals 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 SilverCrest Metals are associated (or correlated) with Bank of Ireland Group PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland Group PLC has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and Bank of Ireland Group PLC go up and down completely randomly.

Pair Corralation between SilverCrest Metals and Bank of Ireland Group PLC

Assuming the 90 days trading horizon SilverCrest Metals is expected to generate 3.92 times more return on investment than Bank of Ireland Group PLC. However, SilverCrest Metals is 3.92 times more volatile than Bank of Ireland. It trades about 0.18 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.29 per unit of risk. If you would invest  1,395  in SilverCrest Metals on December 1, 2024 and sell it today you would earn a total of  220.00  from holding SilverCrest Metals or generate 15.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	22.58%
Values	Daily Returns

SilverCrest Metals  vs.  Bank of Ireland

SilverCrest Metals

Risk-Adjusted Performance

Good

Over the last 90 days SilverCrest Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, SilverCrest Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bank of Ireland Group PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Ireland are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bank of Ireland Group PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SilverCrest Metals and Bank of Ireland Group PLC

The main advantage of trading using opposite SilverCrest Metals and Bank of Ireland Group PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SilverCrest Metals position performs unexpectedly, Bank of Ireland Group PLC 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 Bank of Ireland Group PLC will offset losses from the drop in Bank of Ireland Group PLC's long position.

The idea behind SilverCrest Metals and Bank of Ireland pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.