Correlation Between Dolly Varden and Excellon Resources

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

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

Diversification Opportunities for Dolly Varden and Excellon Resources

0.26

Correlation Coefficient

Dolly Varden  Excellon Resources

Modest diversification

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

Pair Corralation between Dolly Varden and Excellon Resources

Given the investment horizon of 90 days Dolly Varden is expected to generate 14.07 times less return on investment than Excellon Resources. But when comparing it to its historical volatility, Dolly Varden Silver is 2.12 times less risky than Excellon Resources. It trades about 0.01 of its potential returns per unit of risk. Excellon Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Excellon Resources on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Excellon Resources or generate 22.22% return on investment over 90 days.

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

Dolly Varden Silver  vs.  Excellon Resources

Dolly Varden Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolly Varden Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dolly Varden is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Excellon Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Excellon Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Excellon Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolly Varden and Excellon Resources

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

The idea behind Dolly Varden Silver and Excellon 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.