Correlation Between ROKMASTER Resources and Defiance Silver

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

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

Diversification Opportunities for ROKMASTER Resources and Defiance Silver

0.45

Correlation Coefficient

ROKMASTER Resources  Defiance Silver

Very weak diversification

The 3 months correlation between ROKMASTER and Defiance is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ROKMASTER Resources 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 ROKMASTER Resources 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 ROKMASTER Resources 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 ROKMASTER Resources i.e., ROKMASTER Resources and Defiance Silver go up and down completely randomly.

Pair Corralation between ROKMASTER Resources and Defiance Silver

Assuming the 90 days horizon ROKMASTER Resources Corp is expected to generate 3.08 times more return on investment than Defiance Silver. However, ROKMASTER Resources is 3.08 times more volatile than Defiance Silver Corp. It trades about 0.09 of its potential returns per unit of risk. Defiance Silver Corp is currently generating about -0.13 per unit of risk. If you would invest  2.00  in ROKMASTER Resources Corp on September 23, 2024 and sell it today you would earn a total of  0.00  from holding ROKMASTER Resources Corp or generate 0.0% return on investment over 90 days.

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

ROKMASTER Resources Corp  vs.  Defiance Silver Corp

ROKMASTER Resources Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ROKMASTER Resources Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ROKMASTER Resources 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with ROKMASTER Resources and Defiance Silver

The main advantage of trading using opposite ROKMASTER Resources and Defiance Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROKMASTER Resources 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 ROKMASTER Resources 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.