Correlation Between Solitario Exploration and Almaden Minerals

Can any of the company-specific risk be diversified away by investing in both Solitario Exploration and Almaden Minerals 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 Solitario Exploration and Almaden Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solitario Exploration Royalty and Almaden Minerals, you can compare the effects of market volatilities on Solitario Exploration and Almaden Minerals 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 Solitario Exploration with a short position of Almaden Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solitario Exploration and Almaden Minerals.

Diversification Opportunities for Solitario Exploration and Almaden Minerals

0.45

Correlation Coefficient

Solitario Exploration  Almaden Minerals

Very weak diversification

The 3 months correlation between Solitario and Almaden is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Solitario Exploration Royalty and Almaden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almaden Minerals and Solitario Exploration 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 Solitario Exploration Royalty are associated (or correlated) with Almaden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almaden Minerals has no effect on the direction of Solitario Exploration i.e., Solitario Exploration and Almaden Minerals go up and down completely randomly.

Pair Corralation between Solitario Exploration and Almaden Minerals

Assuming the 90 days trading horizon Solitario Exploration Royalty is expected to under-perform the Almaden Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Solitario Exploration Royalty is 2.59 times less risky than Almaden Minerals. The stock trades about -0.04 of its potential returns per unit of risk. The Almaden Minerals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Almaden Minerals on September 14, 2024 and sell it today you would lose (0.50) from holding Almaden Minerals or give up 8.33% of portfolio value over 90 days.

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

Solitario Exploration Royalty  vs.  Almaden Minerals

Solitario Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solitario Exploration Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Almaden Minerals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Almaden Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Almaden Minerals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Solitario Exploration and Almaden Minerals

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

The idea behind Solitario Exploration Royalty and Almaden Minerals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.