Correlation Between Bear Creek and Defiance Silver

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

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

Diversification Opportunities for Bear Creek and Defiance Silver

0.91

Correlation Coefficient

Bear Creek  Defiance Silver

Almost no diversification

The 3 months correlation between Bear and Defiance is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bear Creek Mining and Defiance Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Silver Corp and Bear Creek 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 Bear Creek Mining are associated (or correlated) with Defiance Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Silver Corp has no effect on the direction of Bear Creek i.e., Bear Creek and Defiance Silver go up and down completely randomly.

Pair Corralation between Bear Creek and Defiance Silver

Assuming the 90 days horizon Bear Creek is expected to generate 2.83 times less return on investment than Defiance Silver. But when comparing it to its historical volatility, Bear Creek Mining is 1.37 times less risky than Defiance Silver. It trades about 0.02 of its potential returns per unit of risk. Defiance Silver Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Defiance Silver Corp on October 12, 2024 and sell it today you would earn a total of  2.00  from holding Defiance Silver Corp or generate 15.38% return on investment over 90 days.

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

Bear Creek Mining  vs.  Defiance Silver Corp

Bear Creek Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bear Creek Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Defiance Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bear Creek and Defiance Silver

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

The idea behind Bear Creek Mining and Defiance Silver Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.