Correlation Between Nortec Minerals and Defiance Silver

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

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

Diversification Opportunities for Nortec Minerals and Defiance Silver

-0.2

Correlation Coefficient

Nortec Minerals  Defiance Silver

Good diversification

The 3 months correlation between Nortec and Defiance is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nortec Minerals Corp and Defiance Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Silver Corp and Nortec Minerals 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 Nortec Minerals Corp are associated (or correlated) with Defiance Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Silver Corp has no effect on the direction of Nortec Minerals i.e., Nortec Minerals and Defiance Silver go up and down completely randomly.

Pair Corralation between Nortec Minerals and Defiance Silver

Assuming the 90 days horizon Nortec Minerals is expected to generate 1.05 times less return on investment than Defiance Silver. In addition to that, Nortec Minerals is 1.35 times more volatile than Defiance Silver Corp. It trades about 0.03 of its total potential returns per unit of risk. Defiance Silver Corp is currently generating about 0.04 per unit of volatility. If you would invest  16.00  in Defiance Silver Corp on October 20, 2024 and sell it today you would earn a total of  5.00  from holding Defiance Silver Corp or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nortec Minerals Corp  vs.  Defiance Silver Corp

Nortec Minerals Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nortec Minerals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Nortec Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Defiance Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nortec Minerals and Defiance Silver

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

The idea behind Nortec Minerals Corp and Defiance 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 Commodity Directory module to find actively traded commodities issued by global exchanges.