Correlation Between Canadian Natural and Avino Silver

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

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

Diversification Opportunities for Canadian Natural and Avino Silver

0.56

Correlation Coefficient

Canadian Natural  Avino Silver

Very weak diversification

The 3 months correlation between Canadian and Avino is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Avino Silver Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avino Silver Gold and Canadian Natural 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 Canadian Natural Resources are associated (or correlated) with Avino Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avino Silver Gold has no effect on the direction of Canadian Natural i.e., Canadian Natural and Avino Silver go up and down completely randomly.

Pair Corralation between Canadian Natural and Avino Silver

Assuming the 90 days trading horizon Canadian Natural is expected to generate 8.84 times less return on investment than Avino Silver. But when comparing it to its historical volatility, Canadian Natural Resources is 2.15 times less risky than Avino Silver. It trades about 0.03 of its potential returns per unit of risk. Avino Silver Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Avino Silver Gold on September 3, 2024 and sell it today you would earn a total of  31.00  from holding Avino Silver Gold or generate 24.41% return on investment over 90 days.

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

Canadian Natural Resources  vs.  Avino Silver Gold

Canadian Natural Res

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Natural Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Canadian Natural is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Avino Silver Gold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avino Silver Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Avino Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Natural and Avino Silver

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

The idea behind Canadian Natural Resources and Avino Silver Gold 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.