Correlation Between Americas Silver and Dolly Varden

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

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

Diversification Opportunities for Americas Silver and Dolly Varden

0.68

Correlation Coefficient

Americas Silver  Dolly Varden

Poor diversification

The 3 months correlation between Americas and Dolly is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Americas Silver Corp and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver and Americas 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 Americas Silver Corp are associated (or correlated) with Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of Americas Silver i.e., Americas Silver and Dolly Varden go up and down completely randomly.

Pair Corralation between Americas Silver and Dolly Varden

Assuming the 90 days trading horizon Americas Silver Corp is expected to generate 1.81 times more return on investment than Dolly Varden. However, Americas Silver is 1.81 times more volatile than Dolly Varden Silver. It trades about 0.14 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about 0.0 per unit of risk. If you would invest  38.00  in Americas Silver Corp on September 14, 2024 and sell it today you would earn a total of  19.00  from holding Americas Silver Corp or generate 50.0% return on investment over 90 days.

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

Americas Silver Corp  vs.  Dolly Varden Silver

Americas Silver Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Americas Silver Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Americas Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Dolly Varden Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolly Varden Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dolly Varden is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Americas Silver and Dolly Varden

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

The idea behind Americas Silver Corp and Dolly Varden Silver 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.