Correlation Between Defiance Silver and Earth Alive

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

Diversification Opportunities for Defiance Silver and Earth Alive

0.0

Correlation Coefficient

Defiance Silver  Earth Alive

Pay attention - limited upside

The 3 months correlation between Defiance and Earth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Earth Alive Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earth Alive Clean 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 Earth Alive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earth Alive Clean has no effect on the direction of Defiance Silver i.e., Defiance Silver and Earth Alive go up and down completely randomly.

Pair Corralation between Defiance Silver and Earth Alive

Assuming the 90 days horizon Defiance Silver is expected to generate 2.85 times less return on investment than Earth Alive. But when comparing it to its historical volatility, Defiance Silver Corp is 2.22 times less risky than Earth Alive. It trades about 0.04 of its potential returns per unit of risk. Earth Alive Clean is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Earth Alive Clean on October 22, 2024 and sell it today you would lose (1.50) from holding Earth Alive Clean or give up 75.0% of portfolio value over 90 days.

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

Defiance Silver Corp  vs.  Earth Alive Clean

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Earth Alive Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Earth Alive Clean has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Earth Alive is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Defiance Silver and Earth Alive

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

The idea behind Defiance Silver Corp and Earth Alive Clean 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.