Correlation Between Silver Spruce and International Battery

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

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

Diversification Opportunities for Silver Spruce and International Battery

0.15

Correlation Coefficient

Silver Spruce  International Battery

Average diversification

The 3 months correlation between Silver and International is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spruce Resources and International Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Battery and Silver Spruce 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 Spruce Resources are associated (or correlated) with International Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Battery has no effect on the direction of Silver Spruce i.e., Silver Spruce and International Battery go up and down completely randomly.

Pair Corralation between Silver Spruce and International Battery

Assuming the 90 days horizon Silver Spruce Resources is expected to under-perform the International Battery. But the pink sheet apears to be less risky and, when comparing its historical volatility, Silver Spruce Resources is 2.53 times less risky than International Battery. The pink sheet trades about 0.0 of its potential returns per unit of risk. The International Battery Metals is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  20.00  in International Battery Metals on October 11, 2024 and sell it today you would earn a total of  24.00  from holding International Battery Metals or generate 120.0% return on investment over 90 days.

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

Silver Spruce Resources  vs.  International Battery Metals

Silver Spruce Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Spruce Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

International Battery

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Silver Spruce and International Battery

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

The idea behind Silver Spruce Resources and International Battery 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.