Correlation Between Eskay Mining and Defiance Silver

Can any of the company-specific risk be diversified away by investing in both Eskay Mining and Defiance 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 Eskay Mining and Defiance Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Eskay Mining and Defiance Silver

0.33

Correlation Coefficient

Eskay Mining  Defiance Silver

Weak diversification

The 3 months correlation between Eskay and Defiance is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Defiance Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Silver Corp and Eskay Mining 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 Eskay Mining Corp are associated (or correlated) with Defiance Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Silver Corp has no effect on the direction of Eskay Mining i.e., Eskay Mining and Defiance Silver go up and down completely randomly.

Pair Corralation between Eskay Mining and Defiance Silver

Assuming the 90 days horizon Eskay Mining Corp is expected to under-perform the Defiance Silver. In addition to that, Eskay Mining is 1.03 times more volatile than Defiance Silver Corp. It trades about -0.02 of its total potential returns per unit of risk. Defiance Silver Corp is currently generating about 0.01 per unit of volatility. If you would invest  28.00  in Defiance Silver Corp on September 13, 2024 and sell it today you would lose (3.00) from holding Defiance Silver Corp or give up 10.71% of portfolio value over 90 days.

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

Eskay Mining Corp  vs.  Defiance Silver Corp

Eskay Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eskay Mining Corp 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.

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 fairly stable basic indicators, Defiance Silver 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 Eskay Mining and Defiance Silver

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

The idea behind Eskay Mining Corp and Defiance 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.