Correlation Between Defiance Silver and Mantaro Silver

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

Diversification Opportunities for Defiance Silver and Mantaro Silver

-0.02

Correlation Coefficient

Defiance Silver  Mantaro Silver

Good diversification

The 3 months correlation between Defiance and Mantaro is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Mantaro Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mantaro Silver 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 Mantaro Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mantaro Silver Corp has no effect on the direction of Defiance Silver i.e., Defiance Silver and Mantaro Silver go up and down completely randomly.

Pair Corralation between Defiance Silver and Mantaro Silver

Assuming the 90 days horizon Defiance Silver is expected to generate 1.52 times less return on investment than Mantaro Silver. But when comparing it to its historical volatility, Defiance Silver Corp is 2.03 times less risky than Mantaro Silver. It trades about 0.07 of its potential returns per unit of risk. Mantaro Silver Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Mantaro Silver Corp on September 4, 2024 and sell it today you would lose (3.31) from holding Mantaro Silver Corp or give up 30.09% of portfolio value over 90 days.

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

Defiance Silver Corp  vs.  Mantaro Silver Corp

Defiance Silver Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Silver Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Defiance Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Mantaro Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mantaro 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Defiance Silver and Mantaro Silver

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

The idea behind Defiance Silver Corp and Mantaro 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.