Correlation Between Global X and SilverCrest Metals

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

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

Diversification Opportunities for Global X and SilverCrest Metals

0.81

Correlation Coefficient

Global X  SilverCrest Metals

Very poor diversification

The 3 months correlation between Global and SilverCrest is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Global X Silver and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals and Global X 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 Global X Silver 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 Global X i.e., Global X and SilverCrest Metals go up and down completely randomly.

Pair Corralation between Global X and SilverCrest Metals

Considering the 90-day investment horizon Global X is expected to generate 5.69 times less return on investment than SilverCrest Metals. But when comparing it to its historical volatility, Global X Silver is 1.89 times less risky than SilverCrest Metals. It trades about 0.06 of its potential returns per unit of risk. SilverCrest Metals is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  922.00  in SilverCrest Metals on October 23, 2024 and sell it today you would earn a total of  104.00  from holding SilverCrest Metals or generate 11.28% return on investment over 90 days.

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

Global X Silver  vs.  SilverCrest Metals

Global X Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Etf's forward indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

SilverCrest Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverCrest Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Global X and SilverCrest Metals

The main advantage of trading using opposite Global X and SilverCrest Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Silver 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.