Correlation Between Silver Dollar and First Energy

Can any of the company-specific risk be diversified away by investing in both Silver Dollar and First Energy 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 Silver Dollar and First Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Silver Dollar Resources and First Energy Metals, you can compare the effects of market volatilities on Silver Dollar and First Energy 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 Silver Dollar with a short position of First Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Dollar and First Energy.

Diversification Opportunities for Silver Dollar and First Energy

0.6

Correlation Coefficient

Silver Dollar  First Energy

Poor diversification

The 3 months correlation between Silver and First is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Silver Dollar Resources and First Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Energy Metals and Silver Dollar 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 Silver Dollar Resources are associated (or correlated) with First Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Energy Metals has no effect on the direction of Silver Dollar i.e., Silver Dollar and First Energy go up and down completely randomly.

Pair Corralation between Silver Dollar and First Energy

Assuming the 90 days horizon Silver Dollar Resources is expected to generate 0.44 times more return on investment than First Energy. However, Silver Dollar Resources is 2.26 times less risky than First Energy. It trades about 0.0 of its potential returns per unit of risk. First Energy Metals is currently generating about 0.0 per unit of risk. If you would invest  19.00  in Silver Dollar Resources on December 29, 2024 and sell it today you would lose (2.00) from holding Silver Dollar Resources or give up 10.53% of portfolio value over 90 days.

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

Silver Dollar Resources  vs.  First Energy Metals

Silver Dollar Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Dollar Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Silver Dollar is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

First Energy Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, First Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Silver Dollar and First Energy

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

The idea behind Silver Dollar Resources and First Energy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.