Correlation Between Independence Gold and Fortuna Silver

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

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

Diversification Opportunities for Independence Gold and Fortuna Silver

0.5

Correlation Coefficient

Independence Gold  Fortuna Silver

Very weak diversification

The 3 months correlation between Independence and Fortuna is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Independence Gold Corp and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines and Independence Gold 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 Independence Gold Corp are associated (or correlated) with Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Independence Gold i.e., Independence Gold and Fortuna Silver go up and down completely randomly.

Pair Corralation between Independence Gold and Fortuna Silver

Assuming the 90 days horizon Independence Gold Corp is expected to under-perform the Fortuna Silver. In addition to that, Independence Gold is 1.42 times more volatile than Fortuna Silver Mines. It trades about -0.06 of its total potential returns per unit of risk. Fortuna Silver Mines is currently generating about 0.0 per unit of volatility. If you would invest  454.00  in Fortuna Silver Mines on December 1, 2024 and sell it today you would lose (22.00) from holding Fortuna Silver Mines or give up 4.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Independence Gold Corp  vs.  Fortuna Silver Mines

Independence Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Independence Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Fortuna Silver Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortuna Silver Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fortuna Silver is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Independence Gold and Fortuna Silver

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

The idea behind Independence Gold Corp and Fortuna Silver Mines 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.