Correlation Between SilverCrest Metals and New Pacific

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

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

Diversification Opportunities for SilverCrest Metals and New Pacific

-0.06

Correlation Coefficient

SilverCrest Metals  New Pacific

Good diversification

The 3 months correlation between SilverCrest and New is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific Metals 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 New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and New Pacific go up and down completely randomly.

Pair Corralation between SilverCrest Metals and New Pacific

Given the investment horizon of 90 days SilverCrest Metals is expected to generate 0.71 times more return on investment than New Pacific. However, SilverCrest Metals is 1.4 times less risky than New Pacific. It trades about 0.44 of its potential returns per unit of risk. New Pacific Metals is currently generating about -0.04 per unit of risk. If you would invest  966.00  in SilverCrest Metals on November 28, 2024 and sell it today you would earn a total of  189.00  from holding SilverCrest Metals or generate 19.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

SilverCrest Metals  vs.  New Pacific Metals

SilverCrest Metals

Risk-Adjusted Performance

Modest

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 conflicting essential indicators, SilverCrest Metals showed solid returns over the last few months and may actually be approaching a breakup point.

New Pacific Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Pacific Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with SilverCrest Metals and New Pacific

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

The idea behind SilverCrest Metals and New Pacific 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.