Correlation Between International Tower and Solitario Exploration

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

By analyzing existing cross correlation between International Tower Hill and Solitario Exploration Royalty, you can compare the effects of market volatilities on International Tower and Solitario Exploration 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 International Tower with a short position of Solitario Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Tower and Solitario Exploration.

Diversification Opportunities for International Tower and Solitario Exploration

0.44

Correlation Coefficient

International Tower  Solitario Exploration

Very weak diversification

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

Pair Corralation between International Tower and Solitario Exploration

Considering the 90-day investment horizon International Tower Hill is expected to generate 1.31 times more return on investment than Solitario Exploration. However, International Tower is 1.31 times more volatile than Solitario Exploration Royalty. It trades about 0.01 of its potential returns per unit of risk. Solitario Exploration Royalty is currently generating about -0.07 per unit of risk. If you would invest  49.00  in International Tower Hill on September 3, 2024 and sell it today you would lose (3.00) from holding International Tower Hill or give up 6.12% of portfolio value over 90 days.

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

International Tower Hill  vs.  Solitario Exploration Royalty

International Tower Hill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Tower Hill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, International Tower is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Solitario Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solitario Exploration Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with International Tower and Solitario Exploration

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

The idea behind International Tower Hill and Solitario Exploration Royalty 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.