Correlation Between SilverCrest Metals and Precipitate Gold

Can any of the company-specific risk be diversified away by investing in both SilverCrest Metals and Precipitate Gold 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 SilverCrest Metals and Precipitate Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for SilverCrest Metals and Precipitate Gold

-0.07

Correlation Coefficient

SilverCrest Metals  Precipitate Gold

Good diversification

The 3 months correlation between SilverCrest and Precipitate is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and Precipitate Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precipitate Gold Corp and SilverCrest Metals 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 SilverCrest Metals are associated (or correlated) with Precipitate Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precipitate Gold Corp has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and Precipitate Gold go up and down completely randomly.

Pair Corralation between SilverCrest Metals and Precipitate Gold

Assuming the 90 days trading horizon SilverCrest Metals is expected to generate 1.63 times less return on investment than Precipitate Gold. But when comparing it to its historical volatility, SilverCrest Metals is 2.27 times less risky than Precipitate Gold. It trades about 0.05 of its potential returns per unit of risk. Precipitate Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Precipitate Gold Corp on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Precipitate Gold Corp or generate 0.0% return on investment over 90 days.

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

SilverCrest Metals  vs.  Precipitate Gold Corp

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 unfluctuating essential indicators, SilverCrest Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Precipitate Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with SilverCrest Metals and Precipitate Gold

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

The idea behind SilverCrest Metals and Precipitate Gold 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.