Correlation Between SilverCrest Metals and GoGold Resources

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

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

Diversification Opportunities for SilverCrest Metals and GoGold Resources

0.59

Correlation Coefficient

SilverCrest Metals  GoGold Resources

Very weak diversification

The 3 months correlation between SilverCrest and GoGold is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources 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 GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and GoGold Resources go up and down completely randomly.

Pair Corralation between SilverCrest Metals and GoGold Resources

Given the investment horizon of 90 days SilverCrest Metals is expected to under-perform the GoGold Resources. In addition to that, SilverCrest Metals is 1.13 times more volatile than GoGold Resources. It trades about -0.2 of its total potential returns per unit of risk. GoGold Resources is currently generating about -0.04 per unit of volatility. If you would invest  85.00  in GoGold Resources on October 8, 2024 and sell it today you would lose (3.00) from holding GoGold Resources or give up 3.53% of portfolio value over 90 days.

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

SilverCrest Metals  vs.  GoGold Resources

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 fairly stable essential indicators, SilverCrest Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GoGold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoGold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SilverCrest Metals and GoGold Resources

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

The idea behind SilverCrest Metals and GoGold Resources 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.