Correlation Between Carters and Summa Silver

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

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

Diversification Opportunities for Carters and Summa Silver

0.7

Correlation Coefficient

Carters  Summa Silver

Poor diversification

The 3 months correlation between Carters and Summa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp and Carters 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 Carters are associated (or correlated) with Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Carters i.e., Carters and Summa Silver go up and down completely randomly.

Pair Corralation between Carters and Summa Silver

Considering the 90-day investment horizon Carters is expected to generate 0.41 times more return on investment than Summa Silver. However, Carters is 2.44 times less risky than Summa Silver. It trades about -0.16 of its potential returns per unit of risk. Summa Silver Corp is currently generating about -0.08 per unit of risk. If you would invest  5,492  in Carters on October 11, 2024 and sell it today you would lose (388.00) from holding Carters or give up 7.06% of portfolio value over 90 days.

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

Carters  vs.  Summa Silver Corp

Carters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa 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 Carters and Summa Silver

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

The idea behind Carters and Summa 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.