Correlation Between Summa Silver and Goliath Resources

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

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

Diversification Opportunities for Summa Silver and Goliath Resources

0.94

Correlation Coefficient

Summa Silver  Goliath Resources

Almost no diversification

The 3 months correlation between Summa and Goliath is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Goliath Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goliath Resources and Summa Silver 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 Summa Silver Corp are associated (or correlated) with Goliath Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goliath Resources has no effect on the direction of Summa Silver i.e., Summa Silver and Goliath Resources go up and down completely randomly.

Pair Corralation between Summa Silver and Goliath Resources

Assuming the 90 days trading horizon Summa Silver Corp is expected to under-perform the Goliath Resources. In addition to that, Summa Silver is 1.24 times more volatile than Goliath Resources. It trades about -0.04 of its total potential returns per unit of risk. Goliath Resources is currently generating about 0.05 per unit of volatility. If you would invest  82.00  in Goliath Resources on September 24, 2024 and sell it today you would earn a total of  23.00  from holding Goliath Resources or generate 28.05% return on investment over 90 days.

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

Summa Silver Corp  vs.  Goliath Resources

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Goliath Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goliath Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Summa Silver and Goliath Resources

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

The idea behind Summa Silver Corp and Goliath 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.