Correlation Between Dolly Varden and Galway Metals

Can any of the company-specific risk be diversified away by investing in both Dolly Varden and Galway Metals 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 Galway Metals 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 Galway Metals, you can compare the effects of market volatilities on Dolly Varden and Galway Metals 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 Galway Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolly Varden and Galway Metals.

Diversification Opportunities for Dolly Varden and Galway Metals

0.19

Correlation Coefficient

Dolly Varden  Galway Metals

Average diversification

The 3 months correlation between Dolly and Galway is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dolly Varden Silver and Galway Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galway Metals 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 Galway Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galway Metals has no effect on the direction of Dolly Varden i.e., Dolly Varden and Galway Metals go up and down completely randomly.

Pair Corralation between Dolly Varden and Galway Metals

Given the investment horizon of 90 days Dolly Varden Silver is expected to generate 0.58 times more return on investment than Galway Metals. However, Dolly Varden Silver is 1.72 times less risky than Galway Metals. It trades about -0.08 of its potential returns per unit of risk. Galway Metals is currently generating about -0.09 per unit of risk. If you would invest  114.00  in Dolly Varden Silver on September 25, 2024 and sell it today you would lose (23.00) from holding Dolly Varden Silver or give up 20.18% of portfolio value over 90 days.

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

Dolly Varden Silver  vs.  Galway Metals

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Galway Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galway Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Dolly Varden and Galway Metals

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

The idea behind Dolly Varden Silver and Galway Metals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.