Correlation Between Summa Silver and NI Holdings

Can any of the company-specific risk be diversified away by investing in both Summa Silver and NI Holdings 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 NI Holdings 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 NI Holdings, you can compare the effects of market volatilities on Summa Silver and NI Holdings 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 NI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and NI Holdings.

Diversification Opportunities for Summa Silver and NI Holdings

-0.42

Correlation Coefficient

Summa Silver  NI Holdings

Very good diversification

The 3 months correlation between Summa and NODK is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings 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 NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of Summa Silver i.e., Summa Silver and NI Holdings go up and down completely randomly.

Pair Corralation between Summa Silver and NI Holdings

Assuming the 90 days horizon Summa Silver Corp is expected to generate 3.67 times more return on investment than NI Holdings. However, Summa Silver is 3.67 times more volatile than NI Holdings. It trades about -0.03 of its potential returns per unit of risk. NI Holdings is currently generating about -0.37 per unit of risk. If you would invest  20.00  in Summa Silver Corp on October 12, 2024 and sell it today you would lose (1.00) from holding Summa Silver Corp or give up 5.0% of portfolio value over 90 days.

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

Summa Silver Corp  vs.  NI Holdings

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. Despite fragile performance in the last few months, the Stock's basic indicators 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.

NI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, NI Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Summa Silver and NI Holdings

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

The idea behind Summa Silver Corp and NI Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.