Correlation Between TSX Industrials and Blackrock Silver

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

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

Diversification Opportunities for TSX Industrials and Blackrock Silver

0.55

Correlation Coefficient

TSX Industrials  Blackrock Silver

Very weak diversification

The 3 months correlation between TSX and Blackrock is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding TSX Industrials Capped 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 TSX Industrials 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 TSX Industrials Capped 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 TSX Industrials i.e., TSX Industrials and Blackrock Silver go up and down completely randomly.

Pair Corralation between TSX Industrials and Blackrock Silver

Assuming the 90 days trading horizon TSX Industrials is expected to generate 13.2 times less return on investment than Blackrock Silver. But when comparing it to its historical volatility, TSX Industrials Capped is 7.91 times less risky than Blackrock Silver. It trades about 0.09 of its potential returns per unit of risk. Blackrock Silver Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Blackrock Silver Corp on January 26, 2024 and sell it today you would earn a total of  12.00  from holding Blackrock Silver Corp or generate 60.0% return on investment over 90 days.

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

TSX Industrials Capped  vs.  Blackrock Silver Corp

Pair Trading with TSX Industrials and Blackrock Silver

The main advantage of trading using opposite TSX Industrials and Blackrock Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSX Industrials 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 TSX Industrials Capped 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.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.