Correlation Between Firestone Ventures and Silver Hammer

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

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

Diversification Opportunities for Firestone Ventures and Silver Hammer

0.58

Correlation Coefficient

Firestone Ventures  Silver Hammer

Very weak diversification

The 3 months correlation between Firestone and Silver is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Firestone Ventures and Silver Hammer Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Hammer Mining and Firestone Ventures 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 Firestone Ventures are associated (or correlated) with Silver Hammer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Hammer Mining has no effect on the direction of Firestone Ventures i.e., Firestone Ventures and Silver Hammer go up and down completely randomly.

Pair Corralation between Firestone Ventures and Silver Hammer

Assuming the 90 days horizon Firestone Ventures is expected to generate 8.84 times less return on investment than Silver Hammer. But when comparing it to its historical volatility, Firestone Ventures is 6.22 times less risky than Silver Hammer. It trades about 0.13 of its potential returns per unit of risk. Silver Hammer Mining is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Silver Hammer Mining on November 19, 2024 and sell it today you would earn a total of  3.50  from holding Silver Hammer Mining or generate 175.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Firestone Ventures  vs.  Silver Hammer Mining

Firestone Ventures

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firestone Ventures are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Firestone Ventures reported solid returns over the last few months and may actually be approaching a breakup point.

Silver Hammer Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Hammer Mining are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Hammer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Firestone Ventures and Silver Hammer

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

The idea behind Firestone Ventures and Silver Hammer 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.