Correlation Between Silver Mines and Bald Eagle

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

By analyzing existing cross correlation between Silver Mines Limited and Bald Eagle Gold, you can compare the effects of market volatilities on Silver Mines and Bald Eagle 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 Mines with a short position of Bald Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Mines and Bald Eagle.

Diversification Opportunities for Silver Mines and Bald Eagle

-0.31

Correlation Coefficient

Silver Mines  Bald Eagle

Very good diversification

The 3 months correlation between Silver and Bald is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Silver Mines Limited and Bald Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bald Eagle Gold and Silver Mines 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 Mines Limited are associated (or correlated) with Bald Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bald Eagle Gold has no effect on the direction of Silver Mines i.e., Silver Mines and Bald Eagle go up and down completely randomly.

Pair Corralation between Silver Mines and Bald Eagle

Assuming the 90 days horizon Silver Mines Limited is expected to generate 2.88 times more return on investment than Bald Eagle. However, Silver Mines is 2.88 times more volatile than Bald Eagle Gold. It trades about 0.06 of its potential returns per unit of risk. Bald Eagle Gold is currently generating about 0.1 per unit of risk. If you would invest  6.95  in Silver Mines Limited on December 29, 2024 and sell it today you would lose (0.05) from holding Silver Mines Limited or give up 0.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Silver Mines Limited  vs.  Bald Eagle Gold

Silver Mines Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Mines Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Silver Mines reported solid returns over the last few months and may actually be approaching a breakup point.

Bald Eagle Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bald Eagle Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Bald Eagle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Mines and Bald Eagle

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

The idea behind Silver Mines Limited and Bald Eagle Gold 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.