Can any of the company-specific risk be diversified away by investing in both Bear Creek and Blackrock 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 Bear Creek and Blackrock Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bear Creek Mining and Blackrock Silver Corp, you can compare the effects of market volatilities on Bear Creek and Blackrock 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 Bear Creek with a short position of Blackrock Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bear Creek and Blackrock Silver.
Diversification Opportunities for Bear Creek and Blackrock Silver
The 3 months correlation between Bear and Blackrock is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bear Creek Mining and Blackrock Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Silver Corp and Bear Creek 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 Bear Creek Mining are associated (or correlated) with Blackrock Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Silver Corp has no effect on the direction of Bear Creek i.e., Bear Creek and Blackrock Silver go up and down completely randomly.
Pair Corralation between Bear Creek and Blackrock Silver
Assuming the 90 days horizon Bear Creek Mining is expected to under-perform the Blackrock Silver. But the stock apears to be less risky and, when comparing its historical volatility, Bear Creek Mining is 1.05 times less risky than Blackrock Silver. The stock trades about -0.1 of its potential returns per unit of risk. The Blackrock Silver Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Blackrock Silver Corp on July 1, 2023 and sell it today you would lose (9.00) from holding Blackrock Silver Corp or give up 25.0% of portfolio value over 90 days.
Over the last 90 days Bear Creek Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in October 2023. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Over the last 90 days Blackrock Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in October 2023. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Bear Creek and Blackrock Silver Volatility Contrast
Predicted Return Density
Pair Trading with Bear Creek and Blackrock Silver
The main advantage of trading using opposite Bear Creek and Blackrock Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bear Creek position performs unexpectedly, Blackrock 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 Blackrock Silver will offset losses from the drop in Blackrock Silver's long position.
The idea behind Bear Creek Mining and Blackrock 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.
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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