Correlation Between SilverCrest Metals and Hecla Mining

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

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

Diversification Opportunities for SilverCrest Metals and Hecla Mining

0.51

Correlation Coefficient

SilverCrest Metals  Hecla Mining

Very weak diversification

The 3 months correlation between SilverCrest and Hecla is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining 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 Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and Hecla Mining go up and down completely randomly.

Pair Corralation between SilverCrest Metals and Hecla Mining

Given the investment horizon of 90 days SilverCrest Metals is expected to generate 1.86 times more return on investment than Hecla Mining. However, SilverCrest Metals is 1.86 times more volatile than Hecla Mining. It trades about -0.07 of its potential returns per unit of risk. Hecla Mining is currently generating about -0.5 per unit of risk. If you would invest  1,098  in SilverCrest Metals on August 30, 2024 and sell it today you would lose (81.00) from holding SilverCrest Metals or give up 7.38% 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.  Hecla Mining

SilverCrest Metals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SilverCrest Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, SilverCrest Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Hecla Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hecla Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Hecla Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SilverCrest Metals and Hecla Mining

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

The idea behind SilverCrest Metals and Hecla Mining 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.