Correlation Between Dolly Varden and Santacruz Silv

Can any of the company-specific risk be diversified away by investing in both Dolly Varden and Santacruz Silv 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 Dolly Varden and Santacruz Silv into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dolly Varden Silver and Santacruz Silv, you can compare the effects of market volatilities on Dolly Varden and Santacruz Silv 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 Dolly Varden with a short position of Santacruz Silv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolly Varden and Santacruz Silv.

Diversification Opportunities for Dolly Varden and Santacruz Silv

0.15

Correlation Coefficient

Dolly Varden  Santacruz Silv

Average diversification

The 3 months correlation between Dolly and Santacruz is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dolly Varden Silver and Santacruz Silv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santacruz Silv and Dolly Varden 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 Dolly Varden Silver are associated (or correlated) with Santacruz Silv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santacruz Silv has no effect on the direction of Dolly Varden i.e., Dolly Varden and Santacruz Silv go up and down completely randomly.

Pair Corralation between Dolly Varden and Santacruz Silv

Given the investment horizon of 90 days Dolly Varden Silver is expected to under-perform the Santacruz Silv. But the stock apears to be less risky and, when comparing its historical volatility, Dolly Varden Silver is 1.36 times less risky than Santacruz Silv. The stock trades about -0.12 of its potential returns per unit of risk. The Santacruz Silv is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Santacruz Silv on December 1, 2024 and sell it today you would earn a total of  1.00  from holding Santacruz Silv or generate 2.63% return on investment over 90 days.

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

Dolly Varden Silver  vs.  Santacruz Silv

Dolly Varden Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolly Varden Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Santacruz Silv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Santacruz Silv are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Santacruz Silv showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolly Varden and Santacruz Silv

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

The idea behind Dolly Varden Silver and Santacruz Silv 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.