Correlation Between Silver Wolf and AbraSilver Resource

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

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

Diversification Opportunities for Silver Wolf and AbraSilver Resource

0.8

Correlation Coefficient

Silver Wolf  AbraSilver Resource

Very poor diversification

The 3 months correlation between Silver and AbraSilver is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Silver Wolf Exploration and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp and Silver Wolf 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 Wolf Exploration are associated (or correlated) with AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of Silver Wolf i.e., Silver Wolf and AbraSilver Resource go up and down completely randomly.

Pair Corralation between Silver Wolf and AbraSilver Resource

Assuming the 90 days horizon Silver Wolf is expected to generate 1.23 times less return on investment than AbraSilver Resource. But when comparing it to its historical volatility, Silver Wolf Exploration is 1.04 times less risky than AbraSilver Resource. It trades about 0.22 of its potential returns per unit of risk. AbraSilver Resource Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  164.00  in AbraSilver Resource Corp on October 24, 2024 and sell it today you would earn a total of  29.00  from holding AbraSilver Resource Corp or generate 17.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.0%
Values	Daily Returns

Silver Wolf Exploration  vs.  AbraSilver Resource Corp

Silver Wolf Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Wolf Exploration 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 technical and fundamental 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.

AbraSilver Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AbraSilver Resource 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.

Pair Trading with Silver Wolf and AbraSilver Resource

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

The idea behind Silver Wolf Exploration and AbraSilver Resource Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.