Correlation Between Mantaro Silver and Sierra Madre

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

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

Diversification Opportunities for Mantaro Silver and Sierra Madre

0.45

Correlation Coefficient

Mantaro Silver  Sierra Madre

Very weak diversification

The 3 months correlation between Mantaro and Sierra is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mantaro Silver Corp and Sierra Madre Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Madre Gold and Mantaro 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 Mantaro Silver Corp are associated (or correlated) with Sierra Madre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Madre Gold has no effect on the direction of Mantaro Silver i.e., Mantaro Silver and Sierra Madre go up and down completely randomly.

Pair Corralation between Mantaro Silver and Sierra Madre

Assuming the 90 days horizon Mantaro Silver Corp is expected to generate 2.31 times more return on investment than Sierra Madre. However, Mantaro Silver is 2.31 times more volatile than Sierra Madre Gold. It trades about 0.12 of its potential returns per unit of risk. Sierra Madre Gold is currently generating about 0.09 per unit of risk. If you would invest  2.77  in Mantaro Silver Corp on December 30, 2024 and sell it today you would earn a total of  1.68  from holding Mantaro Silver Corp or generate 60.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Mantaro Silver Corp  vs.  Sierra Madre Gold

Mantaro Silver Corp

Risk-Adjusted Performance

OK

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

Sierra Madre Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra Madre Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sierra Madre reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mantaro Silver and Sierra Madre

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

The idea behind Mantaro Silver Corp and Sierra Madre Gold 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.