Correlation Between Fortuna Silver and Collective Mining

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

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

Diversification Opportunities for Fortuna Silver and Collective Mining

0.68

Correlation Coefficient

Fortuna Silver  Collective Mining

Poor diversification

The 3 months correlation between Fortuna and Collective is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines and Collective Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collective Mining and Fortuna 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 Fortuna Silver Mines are associated (or correlated) with Collective Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collective Mining has no effect on the direction of Fortuna Silver i.e., Fortuna Silver and Collective Mining go up and down completely randomly.

Pair Corralation between Fortuna Silver and Collective Mining

Considering the 90-day investment horizon Fortuna Silver is expected to generate 2.39 times less return on investment than Collective Mining. In addition to that, Fortuna Silver is 1.04 times more volatile than Collective Mining. It trades about 0.18 of its total potential returns per unit of risk. Collective Mining is currently generating about 0.44 per unit of volatility. If you would invest  412.00  in Collective Mining on December 20, 2024 and sell it today you would earn a total of  571.00  from holding Collective Mining or generate 138.59% return on investment over 90 days.

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

Fortuna Silver Mines  vs.  Collective Mining

Fortuna Silver Mines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fortuna Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Collective Mining

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Collective Mining are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Collective Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortuna Silver and Collective Mining

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

The idea behind Fortuna Silver Mines and Collective Mining 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.