Correlation Between Avino Silver and Hecla Mining

Can any of the company-specific risk be diversified away by investing in both Avino Silver and Hecla Mining 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 Avino Silver and Hecla Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avino Silver Gold and Hecla Mining, you can compare the effects of market volatilities on Avino Silver and Hecla Mining 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 Avino Silver with a short position of Hecla Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avino Silver and Hecla Mining.

Diversification Opportunities for Avino Silver and Hecla Mining

0.65

Correlation Coefficient

Avino Silver  Hecla Mining

Poor diversification

The 3 months correlation between Avino and Hecla is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Avino Silver Gold and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining and Avino 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 Avino Silver Gold are associated (or correlated) with Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Avino Silver i.e., Avino Silver and Hecla Mining go up and down completely randomly.

Pair Corralation between Avino Silver and Hecla Mining

Considering the 90-day investment horizon Avino Silver Gold is expected to generate 2.32 times more return on investment than Hecla Mining. However, Avino Silver is 2.32 times more volatile than Hecla Mining. It trades about -0.12 of its potential returns per unit of risk. Hecla Mining is currently generating about -0.34 per unit of risk. If you would invest  126.00  in Avino Silver Gold on September 2, 2024 and sell it today you would lose (16.00) from holding Avino Silver Gold or give up 12.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Avino Silver Gold  vs.  Hecla Mining

Avino Silver Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avino Silver Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Avino Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Hecla Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hecla Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Hecla Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Avino Silver and Hecla Mining

The main advantage of trading using opposite Avino Silver and Hecla Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avino Silver position performs unexpectedly, Hecla Mining 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 Hecla Mining will offset losses from the drop in Hecla Mining's long position.

The idea behind Avino Silver Gold and Hecla Mining 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.