Correlation Between Fortuna Silver and Hudbay Minerals

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

Diversification Opportunities for Fortuna Silver and Hudbay Minerals

0.1

Correlation Coefficient

Fortuna Silver  Hudbay Minerals

Average diversification

The 3 months correlation between Fortuna and Hudbay is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines and Hudbay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudbay Minerals 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 Hudbay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudbay Minerals has no effect on the direction of Fortuna Silver i.e., Fortuna Silver and Hudbay Minerals go up and down completely randomly.

Pair Corralation between Fortuna Silver and Hudbay Minerals

Considering the 90-day investment horizon Fortuna Silver Mines is expected to generate 1.01 times more return on investment than Hudbay Minerals. However, Fortuna Silver is 1.01 times more volatile than Hudbay Minerals. It trades about 0.2 of its potential returns per unit of risk. Hudbay Minerals is currently generating about 0.02 per unit of risk. If you would invest  421.00  in Fortuna Silver Mines on December 28, 2024 and sell it today you would earn a total of  203.00  from holding Fortuna Silver Mines or generate 48.22% return on investment over 90 days.

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

Fortuna Silver Mines  vs.  Hudbay Minerals

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 15 (%) 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.

Hudbay Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hudbay Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Hudbay Minerals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fortuna Silver and Hudbay Minerals

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

The idea behind Fortuna Silver Mines and Hudbay Minerals 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.