Correlation Between Avino Silver and BHP Group

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Can any of the company-specific risk be diversified away by investing in both Avino Silver and BHP Group 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 Avino Silver and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avino Silver Gold and BHP Group Limited, you can compare the effects of market volatilities on Avino Silver and BHP Group 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 Avino Silver with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avino Silver and BHP Group.

Diversification Opportunities for Avino Silver and BHP Group

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Avino and BHP is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Avino Silver Gold and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and Avino 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 Avino Silver Gold are associated (or correlated) with BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Avino Silver i.e., Avino Silver and BHP Group go up and down completely randomly.

Pair Corralation between Avino Silver and BHP Group

Considering the 90-day investment horizon Avino Silver Gold is expected to under-perform the BHP Group. In addition to that, Avino Silver is 1.81 times more volatile than BHP Group Limited. It trades about 0.0 of its total potential returns per unit of risk. BHP Group Limited is currently generating about 0.01 per unit of volatility. If you would invest  5,501  in BHP Group Limited on December 20, 2023 and sell it today you would earn a total of  87.00  from holding BHP Group Limited or generate 1.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.7%
ValuesDaily Returns

Avino Silver Gold  vs.  BHP Group Limited

 Performance 
       Timeline  
Avino Silver Gold 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Avino Silver Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Avino Silver displayed solid returns over the last few months and may actually be approaching a breakup point.
BHP Group Limited 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days BHP Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Avino Silver and BHP Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avino Silver and BHP Group

The main advantage of trading using opposite Avino Silver and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avino Silver position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.
The idea behind Avino Silver Gold and BHP Group Limited 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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