Correlation Between North American and Silver Predator

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

By analyzing existing cross correlation between North American Construction and Silver Predator Corp, you can compare the effects of market volatilities on North American and Silver Predator 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 North American with a short position of Silver Predator. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Silver Predator.

Diversification Opportunities for North American and Silver Predator

-0.44

Correlation Coefficient

North American  Silver Predator

Very good diversification

The 3 months correlation between North and Silver is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and Silver Predator Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Predator Corp and North American 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 North American Construction are associated (or correlated) with Silver Predator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Predator Corp has no effect on the direction of North American i.e., North American and Silver Predator go up and down completely randomly.

Pair Corralation between North American and Silver Predator

Assuming the 90 days trading horizon North American is expected to generate 1.38 times less return on investment than Silver Predator. But when comparing it to its historical volatility, North American Construction is 2.61 times less risky than Silver Predator. It trades about 0.06 of its potential returns per unit of risk. Silver Predator Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Silver Predator Corp on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Silver Predator Corp or generate 0.0% return on investment over 90 days.

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

North American Construction  vs.  Silver Predator Corp

North American Const

Risk-Adjusted Performance

6 of 100

Modest

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

Silver Predator Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Predator Corp 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 North American and Silver Predator

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

The idea behind North American Construction and Silver Predator Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.