Correlation Between Silver Tiger and SilverCrest Metals

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

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

Diversification Opportunities for Silver Tiger and SilverCrest Metals

0.6

Correlation Coefficient

Silver Tiger  SilverCrest Metals

Poor diversification

The 3 months correlation between Silver and SilverCrest is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Silver Tiger Metals and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals and Silver Tiger 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 Silver Tiger Metals are associated (or correlated) with SilverCrest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverCrest Metals has no effect on the direction of Silver Tiger i.e., Silver Tiger and SilverCrest Metals go up and down completely randomly.

Pair Corralation between Silver Tiger and SilverCrest Metals

Assuming the 90 days horizon Silver Tiger is expected to generate 1.0 times less return on investment than SilverCrest Metals. In addition to that, Silver Tiger is 1.55 times more volatile than SilverCrest Metals. It trades about 0.08 of its total potential returns per unit of risk. SilverCrest Metals is currently generating about 0.12 per unit of volatility. If you would invest  788.00  in SilverCrest Metals on September 2, 2024 and sell it today you would earn a total of  229.00  from holding SilverCrest Metals or generate 29.06% return on investment over 90 days.

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

Silver Tiger Metals  vs.  SilverCrest Metals

Silver Tiger Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Tiger Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Tiger reported solid returns over the last few months and may actually be approaching a breakup point.

SilverCrest Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SilverCrest Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, SilverCrest Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Tiger and SilverCrest Metals

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

The idea behind Silver Tiger Metals and SilverCrest Metals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.