Correlation Between Defiance Silver and Silver Grail

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

Diversification Opportunities for Defiance Silver and Silver Grail

0.43

Correlation Coefficient

Defiance Silver  Silver Grail

Very weak diversification

The 3 months correlation between Defiance and Silver is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Silver Grail Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Grail 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 Silver Grail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Grail Resources has no effect on the direction of Defiance Silver i.e., Defiance Silver and Silver Grail go up and down completely randomly.

Pair Corralation between Defiance Silver and Silver Grail

Assuming the 90 days horizon Defiance Silver is expected to generate 11.85 times less return on investment than Silver Grail. But when comparing it to its historical volatility, Defiance Silver Corp is 7.28 times less risky than Silver Grail. It trades about 0.05 of its potential returns per unit of risk. Silver Grail Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Silver Grail Resources on December 1, 2024 and sell it today you would earn a total of  5.00  from holding Silver Grail Resources or generate 500.0% return on investment over 90 days.

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

Defiance Silver Corp  vs.  Silver Grail Resources

Defiance Silver Corp

Risk-Adjusted Performance

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.

Silver Grail Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Grail Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Grail reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Defiance Silver and Silver Grail

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

The idea behind Defiance Silver Corp and Silver Grail 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.