Correlation Between Excelsior Mining and Fireweed Zinc

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

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

Diversification Opportunities for Excelsior Mining and Fireweed Zinc

0.21

Correlation Coefficient

Excelsior Mining  Fireweed Zinc

Modest diversification

The 3 months correlation between Excelsior and Fireweed is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Mining Corp and Fireweed Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fireweed Zinc and Excelsior Mining 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 Excelsior Mining Corp are associated (or correlated) with Fireweed Zinc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fireweed Zinc has no effect on the direction of Excelsior Mining i.e., Excelsior Mining and Fireweed Zinc go up and down completely randomly.

Pair Corralation between Excelsior Mining and Fireweed Zinc

Assuming the 90 days trading horizon Excelsior Mining is expected to generate 1.09 times less return on investment than Fireweed Zinc. In addition to that, Excelsior Mining is 1.64 times more volatile than Fireweed Zinc. It trades about 0.08 of its total potential returns per unit of risk. Fireweed Zinc is currently generating about 0.14 per unit of volatility. If you would invest  131.00  in Fireweed Zinc on September 23, 2024 and sell it today you would earn a total of  11.00  from holding Fireweed Zinc or generate 8.4% return on investment over 90 days.

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

Excelsior Mining Corp  vs.  Fireweed Zinc

Excelsior Mining Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Excelsior Mining Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Excelsior Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Fireweed Zinc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fireweed Zinc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fireweed Zinc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Excelsior Mining and Fireweed Zinc

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

The idea behind Excelsior Mining Corp and Fireweed Zinc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.