Correlation Between Excellon Resources and Dolly Varden

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

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

Diversification Opportunities for Excellon Resources and Dolly Varden

0.26

Correlation Coefficient

Excellon Resources  Dolly Varden

Modest diversification

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

Pair Corralation between Excellon Resources and Dolly Varden

Assuming the 90 days trading horizon Excellon Resources is expected to generate 2.12 times more return on investment than Dolly Varden. However, Excellon Resources is 2.12 times more volatile than Dolly Varden Silver. It trades about 0.08 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about 0.01 per unit of risk. 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

Excellon Resources  vs.  Dolly Varden Silver

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.

Dolly Varden Silver

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Excellon Resources and Dolly Varden

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

The idea behind Excellon Resources and Dolly Varden 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.