Correlation Between Defiance Silver and Copper Fox

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

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

Diversification Opportunities for Defiance Silver and Copper Fox

0.04

Correlation Coefficient

Defiance Silver  Copper Fox

Significant diversification

The 3 months correlation between Defiance and Copper is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Copper Fox Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Fox Metals and Defiance Silver 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 Defiance Silver Corp are associated (or correlated) with Copper Fox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Fox Metals has no effect on the direction of Defiance Silver i.e., Defiance Silver and Copper Fox go up and down completely randomly.

Pair Corralation between Defiance Silver and Copper Fox

Assuming the 90 days horizon Defiance Silver is expected to generate 1.09 times less return on investment than Copper Fox. But when comparing it to its historical volatility, Defiance Silver Corp is 1.02 times less risky than Copper Fox. It trades about 0.04 of its potential returns per unit of risk. Copper Fox Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Copper Fox Metals on October 4, 2024 and sell it today you would earn a total of  6.00  from holding Copper Fox Metals or generate 26.09% return on investment over 90 days.

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

Defiance Silver Corp  vs.  Copper Fox Metals

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. In spite of fairly stable basic indicators, Defiance Silver is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Copper Fox Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Copper Fox Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Copper Fox showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Defiance Silver and Copper Fox

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

The idea behind Defiance Silver Corp and Copper Fox Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.