Correlation Between Generation Capital and Silver Castle

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

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

Diversification Opportunities for Generation Capital and Silver Castle

-0.5

Correlation Coefficient

Generation Capital  Silver Castle

Very good diversification

The 3 months correlation between Generation and Silver is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Generation Capital and Silver Castle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Castle Holdings and Generation Capital 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 Generation Capital are associated (or correlated) with Silver Castle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Castle Holdings has no effect on the direction of Generation Capital i.e., Generation Capital and Silver Castle go up and down completely randomly.

Pair Corralation between Generation Capital and Silver Castle

Assuming the 90 days trading horizon Generation Capital is expected to generate 0.66 times more return on investment than Silver Castle. However, Generation Capital is 1.52 times less risky than Silver Castle. It trades about 0.19 of its potential returns per unit of risk. Silver Castle Holdings is currently generating about 0.01 per unit of risk. If you would invest  6,240  in Generation Capital on September 15, 2024 and sell it today you would earn a total of  1,360  from holding Generation Capital or generate 21.79% return on investment over 90 days.

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

Generation Capital  vs.  Silver Castle Holdings

Generation Capital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Capital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Generation Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Silver Castle Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Castle Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Silver Castle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Generation Capital and Silver Castle

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

The idea behind Generation Capital and Silver Castle Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.