Correlation Between IShares Canadian and Americas Silver

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

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

Diversification Opportunities for IShares Canadian and Americas Silver

0.73

Correlation Coefficient

IShares Canadian  Americas Silver

Poor diversification

The 3 months correlation between IShares and Americas is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Americas Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americas Silver Corp and IShares Canadian 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 iShares Canadian HYBrid are associated (or correlated) with Americas Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americas Silver Corp has no effect on the direction of IShares Canadian i.e., IShares Canadian and Americas Silver go up and down completely randomly.

Pair Corralation between IShares Canadian and Americas Silver

Assuming the 90 days trading horizon IShares Canadian is expected to generate 33.34 times less return on investment than Americas Silver. But when comparing it to its historical volatility, iShares Canadian HYBrid is 39.16 times less risky than Americas Silver. It trades about 0.15 of its potential returns per unit of risk. Americas Silver Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4.62  in Americas Silver Corp on October 7, 2024 and sell it today you would earn a total of  53.38  from holding Americas Silver Corp or generate 1155.41% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Americas Silver Corp

iShares Canadian HYBrid

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Americas Silver Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Americas Silver Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Americas Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and Americas Silver

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

The idea behind iShares Canadian HYBrid and Americas 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.