Correlation Between Equity Metals and Honey Badger

Can any of the company-specific risk be diversified away by investing in both Equity Metals and Honey Badger 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 Equity Metals and Honey Badger into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Equity Metals and Honey Badger

0.57

Correlation Coefficient

Equity Metals  Honey Badger

Very weak diversification

The 3 months correlation between Equity and Honey is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Equity Metals and Honey Badger Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honey Badger Silver and Equity Metals 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 Equity Metals are associated (or correlated) with Honey Badger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honey Badger Silver has no effect on the direction of Equity Metals i.e., Equity Metals and Honey Badger go up and down completely randomly.

Pair Corralation between Equity Metals and Honey Badger

Assuming the 90 days horizon Equity Metals is expected to generate 5.66 times less return on investment than Honey Badger. In addition to that, Equity Metals is 1.06 times more volatile than Honey Badger Silver. It trades about 0.02 of its total potential returns per unit of risk. Honey Badger Silver is currently generating about 0.13 per unit of volatility. If you would invest  5.16  in Honey Badger Silver on September 2, 2024 and sell it today you would earn a total of  2.78  from holding Honey Badger Silver or generate 53.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Equity Metals  vs.  Honey Badger Silver

Equity Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Equity Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Honey Badger Silver

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Honey Badger Silver are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Honey Badger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equity Metals and Honey Badger

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

The idea behind Equity Metals and Honey Badger Silver 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.