Correlation Between Guanajuato Silver and Silver X

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

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

Diversification Opportunities for Guanajuato Silver and Silver X

0.4

Correlation Coefficient

Guanajuato Silver  Silver X

Very weak diversification

The 3 months correlation between Guanajuato and Silver is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Guanajuato Silver and Silver X Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver X Mining and Guanajuato 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 Guanajuato Silver are associated (or correlated) with Silver X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver X Mining has no effect on the direction of Guanajuato Silver i.e., Guanajuato Silver and Silver X go up and down completely randomly.

Pair Corralation between Guanajuato Silver and Silver X

Assuming the 90 days trading horizon Guanajuato Silver is expected to generate 1.01 times more return on investment than Silver X. However, Guanajuato Silver is 1.01 times more volatile than Silver X Mining. It trades about 0.04 of its potential returns per unit of risk. Silver X Mining is currently generating about -0.01 per unit of risk. If you would invest  18.00  in Guanajuato Silver on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Guanajuato Silver or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Guanajuato Silver  vs.  Silver X Mining

Guanajuato Silver

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guanajuato Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Guanajuato Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Silver X Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver X Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Silver X 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 Guanajuato Silver and Silver X

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

The idea behind Guanajuato Silver and Silver X 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.