Correlation Between Defiance Silver and NV Gold

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

Diversification Opportunities for Defiance Silver and NV Gold

-0.61

Correlation Coefficient

Defiance Silver  NV Gold

Excellent diversification

The 3 months correlation between Defiance and NVX is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and NV Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Gold Corp 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 NV Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Gold Corp has no effect on the direction of Defiance Silver i.e., Defiance Silver and NV Gold go up and down completely randomly.

Pair Corralation between Defiance Silver and NV Gold

Assuming the 90 days horizon Defiance Silver Corp is expected to generate 1.04 times more return on investment than NV Gold. However, Defiance Silver is 1.04 times more volatile than NV Gold Corp. It trades about 0.13 of its potential returns per unit of risk. NV Gold Corp is currently generating about -0.01 per unit of risk. If you would invest  18.00  in Defiance Silver Corp on December 20, 2024 and sell it today you would earn a total of  9.00  from holding Defiance Silver Corp or generate 50.0% return on investment over 90 days.

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

Defiance Silver Corp  vs.  NV Gold Corp

Defiance Silver Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Silver Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Defiance Silver showed solid returns over the last few months and may actually be approaching a breakup point.

NV Gold Corp

Risk-Adjusted Performance

Weak

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

Pair Trading with Defiance Silver and NV Gold

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

The idea behind Defiance Silver Corp and NV Gold 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.