Correlation Between Silver Grail and Rochester Resources

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

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

Diversification Opportunities for Silver Grail and Rochester Resources

-0.18

Correlation Coefficient

Silver Grail  Rochester Resources

Good diversification

The 3 months correlation between Silver and Rochester is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Silver Grail Resources and Rochester Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rochester Resources and Silver Grail 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 Grail Resources are associated (or correlated) with Rochester Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rochester Resources has no effect on the direction of Silver Grail i.e., Silver Grail and Rochester Resources go up and down completely randomly.

Pair Corralation between Silver Grail and Rochester Resources

Assuming the 90 days horizon Silver Grail is expected to generate 1.1 times less return on investment than Rochester Resources. But when comparing it to its historical volatility, Silver Grail Resources is 2.22 times less risky than Rochester Resources. It trades about 0.02 of its potential returns per unit of risk. Rochester Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Rochester Resources on September 30, 2024 and sell it today you would lose (0.50) from holding Rochester Resources or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Silver Grail Resources  vs.  Rochester Resources

Silver Grail Resources

Risk-Adjusted Performance

1 of 100

Weak

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

Rochester Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rochester Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Rochester Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Silver Grail and Rochester Resources

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

The idea behind Silver Grail Resources and Rochester Resources 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .