Correlation Between BC Craft and Silver Spike

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

By analyzing existing cross correlation between BC Craft Supply and Silver Spike Investment, you can compare the effects of market volatilities on BC Craft and Silver Spike 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 BC Craft with a short position of Silver Spike. Check out your portfolio center. Please also check ongoing floating volatility patterns of BC Craft and Silver Spike.

Diversification Opportunities for BC Craft and Silver Spike

-0.31

Correlation Coefficient

BC Craft  Silver Spike

Very good diversification

The 3 months correlation between CRFTF and Silver is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BC Craft Supply and Silver Spike Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spike Investment and BC Craft 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 BC Craft Supply are associated (or correlated) with Silver Spike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spike Investment has no effect on the direction of BC Craft i.e., BC Craft and Silver Spike go up and down completely randomly.

Pair Corralation between BC Craft and Silver Spike

Assuming the 90 days horizon BC Craft Supply is expected to under-perform the Silver Spike. In addition to that, BC Craft is 28.97 times more volatile than Silver Spike Investment. It trades about -0.28 of its total potential returns per unit of risk. Silver Spike Investment is currently generating about -0.23 per unit of volatility. If you would invest  1,304  in Silver Spike Investment on September 18, 2024 and sell it today you would lose (24.00) from holding Silver Spike Investment or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

BC Craft Supply  vs.  Silver Spike Investment

BC Craft Supply

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BC Craft Supply 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.

Silver Spike Investment

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BC Craft and Silver Spike

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

The idea behind BC Craft Supply and Silver Spike Investment 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.