Correlation Between Bear Creek and Silver Wolf

Can any of the company-specific risk be diversified away by investing in both Bear Creek and Silver Wolf 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 Silver Wolf 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 Silver Wolf Exploration, you can compare the effects of market volatilities on Bear Creek and Silver Wolf 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 Silver Wolf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bear Creek and Silver Wolf.

Diversification Opportunities for Bear Creek and Silver Wolf

0.71

Correlation Coefficient

Bear Creek  Silver Wolf

Poor diversification

The 3 months correlation between Bear and Silver is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bear Creek Mining and Silver Wolf Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Wolf Exploration 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 Silver Wolf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Wolf Exploration has no effect on the direction of Bear Creek i.e., Bear Creek and Silver Wolf go up and down completely randomly.

Pair Corralation between Bear Creek and Silver Wolf

Assuming the 90 days horizon Bear Creek Mining is expected to under-perform the Silver Wolf. But the otc stock apears to be less risky and, when comparing its historical volatility, Bear Creek Mining is 1.92 times less risky than Silver Wolf. The otc stock trades about -0.09 of its potential returns per unit of risk. The Silver Wolf Exploration is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Silver Wolf Exploration on December 19, 2024 and sell it today you would lose (2.75) from holding Silver Wolf Exploration or give up 34.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.72%
Values	Daily Returns

Bear Creek Mining  vs.  Silver Wolf Exploration

Bear Creek Mining

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Silver Wolf Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Wolf Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Silver Wolf is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bear Creek and Silver Wolf

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

The idea behind Bear Creek Mining and Silver Wolf Exploration 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..