Correlation Between SPTSX Dividend and Klondike Silver

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

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

Diversification Opportunities for SPTSX Dividend and Klondike Silver

-0.25

Correlation Coefficient

SPTSX Dividend  Klondike Silver

Very good diversification

The 3 months correlation between SPTSX and Klondike is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SPTSX Dividend Aristocrats and Klondike Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klondike Silver Corp and SPTSX Dividend 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 SPTSX Dividend Aristocrats are associated (or correlated) with Klondike Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klondike Silver Corp has no effect on the direction of SPTSX Dividend i.e., SPTSX Dividend and Klondike Silver go up and down completely randomly.

Pair Corralation between SPTSX Dividend and Klondike Silver

Assuming the 90 days trading horizon SPTSX Dividend is expected to generate 5.96 times less return on investment than Klondike Silver. But when comparing it to its historical volatility, SPTSX Dividend Aristocrats is 19.6 times less risky than Klondike Silver. It trades about 0.12 of its potential returns per unit of risk. Klondike Silver Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Klondike Silver Corp on October 5, 2024 and sell it today you would lose (1.50) from holding Klondike Silver Corp or give up 42.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.25%
Values	Daily Returns

SPTSX Dividend Aristocrats  vs.  Klondike Silver Corp

Pair Trading with SPTSX Dividend and Klondike Silver

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

The idea behind SPTSX Dividend Aristocrats and Klondike 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.