Correlation Between Silver Range and Aris Gold

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

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

Diversification Opportunities for Silver Range and Aris Gold

0.76

Correlation Coefficient

Silver Range  Aris Gold

Poor diversification

The 3 months correlation between Silver and Aris is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Silver Range Resources and Aris Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Gold Corp and Silver Range 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 Silver Range Resources are associated (or correlated) with Aris Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Gold Corp has no effect on the direction of Silver Range i.e., Silver Range and Aris Gold go up and down completely randomly.

Pair Corralation between Silver Range and Aris Gold

Assuming the 90 days horizon Silver Range Resources is expected to generate 2.1 times more return on investment than Aris Gold. However, Silver Range is 2.1 times more volatile than Aris Gold Corp. It trades about 0.24 of its potential returns per unit of risk. Aris Gold Corp is currently generating about 0.29 per unit of risk. If you would invest  6.50  in Silver Range Resources on January 20, 2024 and sell it today you would earn a total of  3.50  from holding Silver Range Resources or generate 53.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Silver Range Resources  vs.  Aris Gold Corp

Silver Range Resources

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Range Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Silver Range showed solid returns over the last few months and may actually be approaching a breakup point.

Aris Gold Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Gold Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Aris Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Range and Aris Gold

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

The idea behind Silver Range Resources and Aris Gold 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.