Correlation Between Silver Mines and Americas Gold

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

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

Diversification Opportunities for Silver Mines and Americas Gold

0.25

Correlation Coefficient

Silver Mines  Americas Gold

Modest diversification

The 3 months correlation between Silver and Americas is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Silver Mines Limited and Americas Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americas Gold and Silver Mines 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 Mines Limited are associated (or correlated) with Americas Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americas Gold has no effect on the direction of Silver Mines i.e., Silver Mines and Americas Gold go up and down completely randomly.

Pair Corralation between Silver Mines and Americas Gold

Assuming the 90 days horizon Silver Mines Limited is expected to generate 1.57 times more return on investment than Americas Gold. However, Silver Mines is 1.57 times more volatile than Americas Gold and. It trades about 0.1 of its potential returns per unit of risk. Americas Gold and is currently generating about 0.14 per unit of risk. If you would invest  4.96  in Silver Mines Limited on December 22, 2024 and sell it today you would earn a total of  1.58  from holding Silver Mines Limited or generate 31.85% return on investment over 90 days.

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

Silver Mines Limited  vs.  Americas Gold and

Silver Mines Limited

Risk-Adjusted Performance

OK

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

Americas Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Americas Gold and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Americas Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Mines and Americas Gold

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

The idea behind Silver Mines Limited and Americas Gold and 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.