Correlation Between SilverCrest Metals and First Mining

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

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

Diversification Opportunities for SilverCrest Metals and First Mining

0.32

Correlation Coefficient

SilverCrest Metals  First Mining

Weak diversification

The 3 months correlation between SilverCrest and First is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold and SilverCrest 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 SilverCrest Metals are associated (or correlated) with First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of SilverCrest Metals i.e., SilverCrest Metals and First Mining go up and down completely randomly.

Pair Corralation between SilverCrest Metals and First Mining

Assuming the 90 days trading horizon SilverCrest Metals is expected to generate 0.73 times more return on investment than First Mining. However, SilverCrest Metals is 1.37 times less risky than First Mining. It trades about 0.15 of its potential returns per unit of risk. First Mining Gold is currently generating about 0.02 per unit of risk. If you would invest  1,065  in SilverCrest Metals on September 2, 2024 and sell it today you would earn a total of  373.00  from holding SilverCrest Metals or generate 35.02% return on investment over 90 days.

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

SilverCrest Metals  vs.  First Mining Gold

SilverCrest Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SilverCrest Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, SilverCrest Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

First Mining Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Mining Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, First Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SilverCrest Metals and First Mining

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

The idea behind SilverCrest Metals and First Mining Gold 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 Commodity Directory module to find actively traded commodities issued by global exchanges.