Correlation Between Durango Resources and Searchlight Resources

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

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

Diversification Opportunities for Durango Resources and Searchlight Resources

0.35

Correlation Coefficient

Durango Resources  Searchlight Resources

Weak diversification

The 3 months correlation between Durango and Searchlight is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Durango Resources and Searchlight Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Resources and Durango Resources 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 Durango Resources are associated (or correlated) with Searchlight Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Resources has no effect on the direction of Durango Resources i.e., Durango Resources and Searchlight Resources go up and down completely randomly.

Pair Corralation between Durango Resources and Searchlight Resources

Assuming the 90 days horizon Durango Resources is expected to generate 0.68 times more return on investment than Searchlight Resources. However, Durango Resources is 1.47 times less risky than Searchlight Resources. It trades about 0.26 of its potential returns per unit of risk. Searchlight Resources is currently generating about 0.16 per unit of risk. If you would invest  1.47  in Durango Resources on December 2, 2024 and sell it today you would earn a total of  11.53  from holding Durango Resources or generate 784.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Durango Resources  vs.  Searchlight Resources

Durango Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Durango Resources are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Durango Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Searchlight Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Searchlight Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Searchlight Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Durango Resources and Searchlight Resources

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

The idea behind Durango Resources and Searchlight Resources 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..