Correlation Between US GoldMining and Summa Silver

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

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

Diversification Opportunities for US GoldMining and Summa Silver

0.72

Correlation Coefficient

US GoldMining  Summa Silver

Poor diversification

The 3 months correlation between USGO and Summa is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding US GoldMining Common and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp and US GoldMining 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 US GoldMining Common are associated (or correlated) with Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of US GoldMining i.e., US GoldMining and Summa Silver go up and down completely randomly.

Pair Corralation between US GoldMining and Summa Silver

Given the investment horizon of 90 days US GoldMining Common is expected to under-perform the Summa Silver. In addition to that, US GoldMining is 1.01 times more volatile than Summa Silver Corp. It trades about 0.0 of its total potential returns per unit of risk. Summa Silver Corp is currently generating about 0.08 per unit of volatility. If you would invest  25.00  in Summa Silver Corp on February 17, 2024 and sell it today you would earn a total of  5.00  from holding Summa Silver Corp or generate 20.0% return on investment over 90 days.

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

US GoldMining Common  vs.  Summa Silver Corp

US GoldMining Common

Risk-Adjusted Performance

0 of 100

Very Weak

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

Summa Silver Corp

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with US GoldMining and Summa Silver

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

The idea behind US GoldMining Common and Summa Silver Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.