Correlation Between 191216DE7 and Summa Silver

Can any of the company-specific risk be diversified away by investing in both 191216DE7 and Summa Silver 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 191216DE7 and Summa Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COCA COLA CO and Summa Silver Corp, you can compare the effects of market volatilities on 191216DE7 and Summa Silver 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 191216DE7 with a short position of Summa Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of 191216DE7 and Summa Silver.

Diversification Opportunities for 191216DE7 and Summa Silver

0.53

Correlation Coefficient

191216DE7  Summa Silver

Very weak diversification

The 3 months correlation between 191216DE7 and Summa is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding COCA COLA CO and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp and 191216DE7 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 COCA COLA CO are associated (or correlated) with Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of 191216DE7 i.e., 191216DE7 and Summa Silver go up and down completely randomly.

Pair Corralation between 191216DE7 and Summa Silver

Assuming the 90 days trading horizon COCA COLA CO is expected to generate 0.1 times more return on investment than Summa Silver. However, COCA COLA CO is 10.52 times less risky than Summa Silver. It trades about 0.03 of its potential returns per unit of risk. Summa Silver Corp is currently generating about -0.06 per unit of risk. If you would invest  8,012  in COCA COLA CO on September 29, 2024 and sell it today you would earn a total of  112.00  from holding COCA COLA CO or generate 1.4% return on investment over 90 days.

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

COCA COLA CO  vs.  Summa Silver Corp

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216DE7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with 191216DE7 and Summa Silver

The main advantage of trading using opposite 191216DE7 and Summa Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 191216DE7 position performs unexpectedly, Summa Silver 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 Summa Silver will offset losses from the drop in Summa Silver's long position.

The idea behind COCA COLA CO and Summa Silver 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.

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.