Correlation Between Silver Spruce and Pershing Resources

Can any of the company-specific risk be diversified away by investing in both Silver Spruce and Pershing 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 Silver Spruce and Pershing Resources 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 Pershing Resources, you can compare the effects of market volatilities on Silver Spruce and Pershing 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 Silver Spruce with a short position of Pershing Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Spruce and Pershing Resources.

Diversification Opportunities for Silver Spruce and Pershing Resources

-0.1

Correlation Coefficient

Silver Spruce  Pershing Resources

Good diversification

The 3 months correlation between Silver and Pershing is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spruce Resources and Pershing Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pershing Resources 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 Pershing Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pershing Resources has no effect on the direction of Silver Spruce i.e., Silver Spruce and Pershing Resources go up and down completely randomly.

Pair Corralation between Silver Spruce and Pershing Resources

Assuming the 90 days horizon Silver Spruce is expected to generate 1.5 times less return on investment than Pershing Resources. In addition to that, Silver Spruce is 1.12 times more volatile than Pershing Resources. It trades about 0.09 of its total potential returns per unit of risk. Pershing Resources is currently generating about 0.15 per unit of volatility. If you would invest  1.02  in Pershing Resources on December 29, 2024 and sell it today you would earn a total of  1.32  from holding Pershing Resources or generate 129.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Silver Spruce Resources  vs.  Pershing Resources

Silver Spruce Resources

Risk-Adjusted Performance

OK

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

Pershing Resources

Risk-Adjusted Performance

Good

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

Pair Trading with Silver Spruce and Pershing Resources

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

The idea behind Silver Spruce Resources and Pershing Resources 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.