Correlation Between Triple Flag and Hecla Mining

Can any of the company-specific risk be diversified away by investing in both Triple Flag and Hecla Mining 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 Triple Flag and Hecla Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Triple Flag Precious and Hecla Mining, you can compare the effects of market volatilities on Triple Flag and Hecla Mining 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 Triple Flag with a short position of Hecla Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triple Flag and Hecla Mining.

Diversification Opportunities for Triple Flag and Hecla Mining

0.26

Correlation Coefficient

Triple Flag  Hecla Mining

Modest diversification

The 3 months correlation between Triple and Hecla is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Triple Flag Precious and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining and Triple Flag 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 Triple Flag Precious are associated (or correlated) with Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Triple Flag i.e., Triple Flag and Hecla Mining go up and down completely randomly.

Pair Corralation between Triple Flag and Hecla Mining

Given the investment horizon of 90 days Triple Flag Precious is expected to generate 0.52 times more return on investment than Hecla Mining. However, Triple Flag Precious is 1.94 times less risky than Hecla Mining. It trades about 0.27 of its potential returns per unit of risk. Hecla Mining is currently generating about 0.11 per unit of risk. If you would invest  1,489  in Triple Flag Precious on December 28, 2024 and sell it today you would earn a total of  483.00  from holding Triple Flag Precious or generate 32.44% return on investment over 90 days.

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

Triple Flag Precious  vs.  Hecla Mining

Triple Flag Precious

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Triple Flag Precious are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Triple Flag displayed solid returns over the last few months and may actually be approaching a breakup point.

Hecla Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hecla Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, Hecla Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Triple Flag and Hecla Mining

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

The idea behind Triple Flag Precious and Hecla Mining 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.