Correlation Between ROKMASTER Resources and SilverCrest Metals

Can any of the company-specific risk be diversified away by investing in both ROKMASTER Resources and SilverCrest Metals 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 SilverCrest Metals 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 SilverCrest Metals, you can compare the effects of market volatilities on ROKMASTER Resources and SilverCrest Metals 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 SilverCrest Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROKMASTER Resources and SilverCrest Metals.

Diversification Opportunities for ROKMASTER Resources and SilverCrest Metals

-0.04

Correlation Coefficient

ROKMASTER Resources  SilverCrest Metals

Good diversification

The 3 months correlation between ROKMASTER and SilverCrest is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ROKMASTER Resources Corp and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals 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 SilverCrest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverCrest Metals has no effect on the direction of ROKMASTER Resources i.e., ROKMASTER Resources and SilverCrest Metals go up and down completely randomly.

Pair Corralation between ROKMASTER Resources and SilverCrest Metals

Assuming the 90 days horizon ROKMASTER Resources Corp is expected to generate 4.79 times more return on investment than SilverCrest Metals. However, ROKMASTER Resources is 4.79 times more volatile than SilverCrest Metals. It trades about 0.03 of its potential returns per unit of risk. SilverCrest Metals is currently generating about -0.09 per unit of risk. If you would invest  2.50  in ROKMASTER Resources Corp on September 28, 2024 and sell it today you would lose (0.50) from holding ROKMASTER Resources Corp or give up 20.0% of portfolio value over 90 days.

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

ROKMASTER Resources Corp  vs.  SilverCrest Metals

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.

SilverCrest Metals

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with ROKMASTER Resources and SilverCrest Metals

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

The idea behind ROKMASTER Resources Corp and SilverCrest Metals 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.