Correlation Between SilverCrest Metals and American Copper

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

By analyzing existing cross correlation between SilverCrest Metals and American Copper Development, you can compare the effects of market volatilities on SilverCrest Metals and American Copper 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 American Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of SilverCrest Metals and American Copper.

Diversification Opportunities for SilverCrest Metals and American Copper

-0.2

Correlation Coefficient

SilverCrest Metals  American Copper

Good diversification

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

Pair Corralation between SilverCrest Metals and American Copper

Given the investment horizon of 90 days SilverCrest Metals is expected to generate 19.76 times less return on investment than American Copper. But when comparing it to its historical volatility, SilverCrest Metals is 41.01 times less risky than American Copper. It trades about 0.26 of its potential returns per unit of risk. American Copper Development is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  15.00  in American Copper Development on December 31, 2024 and sell it today you would lose (5.00) from holding American Copper Development or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

SilverCrest Metals  vs.  American Copper Development

SilverCrest Metals

Risk-Adjusted Performance

Solid

Over the last 90 days SilverCrest Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak essential indicators, SilverCrest Metals showed solid returns over the last few months and may actually be approaching a breakup point.

American Copper Deve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Copper Development are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, American Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SilverCrest Metals and American Copper

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

The idea behind SilverCrest Metals and American Copper Development 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.