Correlation Between Braveheart Resources and SilverCrest Metals

Can any of the company-specific risk be diversified away by investing in both Braveheart Resources and SilverCrest Metals 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 Braveheart Resources and SilverCrest Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Braveheart Resources and SilverCrest Metals

0.77

Correlation Coefficient

Braveheart Resources  SilverCrest Metals

Poor diversification

The 3 months correlation between Braveheart and SilverCrest is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Braveheart Resources and SilverCrest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverCrest Metals and Braveheart Resources 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 Braveheart Resources are associated (or correlated) with SilverCrest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverCrest Metals has no effect on the direction of Braveheart Resources i.e., Braveheart Resources and SilverCrest Metals go up and down completely randomly.

Pair Corralation between Braveheart Resources and SilverCrest Metals

Assuming the 90 days horizon Braveheart Resources is expected to generate 1.97 times more return on investment than SilverCrest Metals. However, Braveheart Resources is 1.97 times more volatile than SilverCrest Metals. It trades about 0.18 of its potential returns per unit of risk. SilverCrest Metals is currently generating about 0.25 per unit of risk. If you would invest  2.15  in Braveheart Resources on March 5, 2024 and sell it today you would earn a total of  1.70  from holding Braveheart Resources or generate 79.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Braveheart Resources  vs.  SilverCrest Metals

Braveheart Resources

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Braveheart Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Braveheart Resources reported solid returns over the last few months and may actually be approaching a breakup point.

SilverCrest Metals

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SilverCrest Metals are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, SilverCrest Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Braveheart Resources and SilverCrest Metals

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

The idea behind Braveheart Resources and SilverCrest Metals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.