Correlation Between SilverCrest Metals and Scottie Resources

Can any of the company-specific risk be diversified away by investing in both SilverCrest Metals and Scottie 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 Scottie 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 Scottie Resources Corp, you can compare the effects of market volatilities on SilverCrest Metals and Scottie 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 Scottie Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SilverCrest Metals and Scottie Resources.

Diversification Opportunities for SilverCrest Metals and Scottie Resources

-0.12

Correlation Coefficient

SilverCrest Metals  Scottie Resources

Good diversification

The 3 months correlation between SilverCrest and Scottie is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and Scottie Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottie Resources Corp 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 Scottie Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottie Resources Corp has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and Scottie Resources go up and down completely randomly.

Pair Corralation between SilverCrest Metals and Scottie Resources

Given the investment horizon of 90 days SilverCrest Metals is expected to generate 27.53 times less return on investment than Scottie Resources. But when comparing it to its historical volatility, SilverCrest Metals is 23.61 times less risky than Scottie Resources. It trades about 0.12 of its potential returns per unit of risk. Scottie Resources Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Scottie Resources Corp on August 31, 2024 and sell it today you would lose (2.00) from holding Scottie Resources Corp or give up 14.29% of portfolio value over 90 days.

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

SilverCrest Metals  vs.  Scottie Resources Corp

SilverCrest Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SilverCrest Metals are ranked lower than 9 (%) 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.

Scottie Resources Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scottie Resources Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scottie Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SilverCrest Metals and Scottie Resources

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

The idea behind SilverCrest Metals and Scottie Resources Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.