Correlation Between Defiance Silver and Sable Resources

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

Diversification Opportunities for Defiance Silver and Sable Resources

0.69

Correlation Coefficient

Defiance Silver  Sable Resources

Poor diversification

The 3 months correlation between Defiance and Sable is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Sable Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Resources 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 Sable Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Resources has no effect on the direction of Defiance Silver i.e., Defiance Silver and Sable Resources go up and down completely randomly.

Pair Corralation between Defiance Silver and Sable Resources

Assuming the 90 days horizon Defiance Silver Corp is expected to generate 0.63 times more return on investment than Sable Resources. However, Defiance Silver Corp is 1.6 times less risky than Sable Resources. It trades about 0.16 of its potential returns per unit of risk. Sable Resources is currently generating about 0.05 per unit of risk. If you would invest  19.00  in Defiance Silver Corp on October 23, 2024 and sell it today you would earn a total of  3.00  from holding Defiance Silver Corp or generate 15.79% return on investment over 90 days.

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

Defiance Silver Corp  vs.  Sable Resources

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.

Sable Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sable Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Defiance Silver and Sable Resources

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

The idea behind Defiance Silver Corp and Sable Resources 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.