Correlation Between SilverCrest Metals and Metalla Royalty

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

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

Diversification Opportunities for SilverCrest Metals and Metalla Royalty

0.77

Correlation Coefficient

SilverCrest Metals  Metalla Royalty

Poor diversification

The 3 months correlation between SilverCrest and Metalla is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming 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 Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and Metalla Royalty go up and down completely randomly.

Pair Corralation between SilverCrest Metals and Metalla Royalty

Given the investment horizon of 90 days SilverCrest Metals is expected to generate 1.04 times more return on investment than Metalla Royalty. However, SilverCrest Metals is 1.04 times more volatile than Metalla Royalty Streaming. It trades about 0.1 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about 0.02 per unit of risk. If you would invest  827.00  in SilverCrest Metals on August 30, 2024 and sell it today you would earn a total of  190.00  from holding SilverCrest Metals or generate 22.97% return on investment over 90 days.

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

SilverCrest Metals  vs.  Metalla Royalty Streaming

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.

Metalla Royalty Streaming

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metalla Royalty Streaming are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Metalla Royalty is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SilverCrest Metals and Metalla Royalty

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

The idea behind SilverCrest Metals and Metalla Royalty Streaming 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.