Correlation Between Americas Silver and Durango Resources

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

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

Diversification Opportunities for Americas Silver and Durango Resources

0.44

Correlation Coefficient

Americas Silver  Durango Resources

Very weak diversification

The 3 months correlation between Americas and Durango is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Americas Silver Corp and Durango Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Durango Resources and Americas Silver 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 Americas Silver Corp are associated (or correlated) with Durango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Durango Resources has no effect on the direction of Americas Silver i.e., Americas Silver and Durango Resources go up and down completely randomly.

Pair Corralation between Americas Silver and Durango Resources

Given the investment horizon of 90 days Americas Silver is expected to generate 4.01 times less return on investment than Durango Resources. But when comparing it to its historical volatility, Americas Silver Corp is 4.01 times less risky than Durango Resources. It trades about 0.17 of its potential returns per unit of risk. Durango Resources is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3.44  in Durango Resources on December 22, 2024 and sell it today you would earn a total of  6.29  from holding Durango Resources or generate 182.85% return on investment over 90 days.

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

Americas Silver Corp  vs.  Durango Resources

Americas Silver Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Americas Silver Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Americas Silver unveiled solid returns over the last few months and may actually be approaching a breakup point.

Durango Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Durango Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Durango Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Americas Silver and Durango Resources

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

The idea behind Americas Silver Corp and Durango Resources 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.