Correlation Between Silver Wolf and Silver Tiger

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

Diversification Opportunities for Silver Wolf and Silver Tiger

0.6

Correlation Coefficient

Silver Wolf  Silver Tiger

Poor diversification

The 3 months correlation between Silver and Silver is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Silver Wolf Exploration and Silver Tiger Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Tiger Metals 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 Silver Tiger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Tiger Metals has no effect on the direction of Silver Wolf i.e., Silver Wolf and Silver Tiger go up and down completely randomly.

Pair Corralation between Silver Wolf and Silver Tiger

Assuming the 90 days horizon Silver Wolf Exploration is expected to under-perform the Silver Tiger. In addition to that, Silver Wolf is 1.89 times more volatile than Silver Tiger Metals. It trades about -0.03 of its total potential returns per unit of risk. Silver Tiger Metals is currently generating about -0.04 per unit of volatility. If you would invest  19.00  in Silver Tiger Metals on October 9, 2024 and sell it today you would lose (2.00) from holding Silver Tiger Metals or give up 10.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.12%
Values	Daily Returns

Silver Wolf Exploration  vs.  Silver Tiger Metals

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 nearly stable technical and fundamental indicators, Silver Wolf is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Silver Tiger Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Tiger Metals 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 Silver Tiger

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

The idea behind Silver Wolf Exploration and Silver Tiger 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.