Correlation Between Summa Silver and PENSKE

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

By analyzing existing cross correlation between Summa Silver Corp and PENSKE 57 01 FEB 28, you can compare the effects of market volatilities on Summa Silver and PENSKE 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 Summa Silver with a short position of PENSKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and PENSKE.

Diversification Opportunities for Summa Silver and PENSKE

0.64

Correlation Coefficient

Summa Silver  PENSKE

Poor diversification

The 3 months correlation between Summa and PENSKE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and PENSKE 57 01 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENSKE 57 01 and Summa Silver 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 Summa Silver Corp are associated (or correlated) with PENSKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENSKE 57 01 has no effect on the direction of Summa Silver i.e., Summa Silver and PENSKE go up and down completely randomly.

Pair Corralation between Summa Silver and PENSKE

Assuming the 90 days horizon Summa Silver Corp is expected to under-perform the PENSKE. In addition to that, Summa Silver is 7.33 times more volatile than PENSKE 57 01 FEB 28. It trades about -0.15 of its total potential returns per unit of risk. PENSKE 57 01 FEB 28 is currently generating about -0.24 per unit of volatility. If you would invest  10,365  in PENSKE 57 01 FEB 28 on September 25, 2024 and sell it today you would lose (631.00) from holding PENSKE 57 01 FEB 28 or give up 6.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	66.67%
Values	Daily Returns

Summa Silver Corp  vs.  PENSKE 57 01 FEB 28

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PENSKE 57 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENSKE 57 01 FEB 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PENSKE 57 01 FEB 28 investors.

Pair Trading with Summa Silver and PENSKE

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

The idea behind Summa Silver Corp and PENSKE 57 01 FEB 28 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.