Correlation Between IShares Physical and Resolute Mining

Can any of the company-specific risk be diversified away by investing in both IShares Physical and Resolute Mining 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 IShares Physical and Resolute Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Physical Silver and Resolute Mining Limited, you can compare the effects of market volatilities on IShares Physical and Resolute Mining 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 IShares Physical with a short position of Resolute Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Physical and Resolute Mining.

Diversification Opportunities for IShares Physical and Resolute Mining

0.05

Correlation Coefficient

IShares Physical  Resolute Mining

Significant diversification

The 3 months correlation between IShares and Resolute is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and Resolute Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resolute Mining and IShares Physical 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 iShares Physical Silver are associated (or correlated) with Resolute Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resolute Mining has no effect on the direction of IShares Physical i.e., IShares Physical and Resolute Mining go up and down completely randomly.

Pair Corralation between IShares Physical and Resolute Mining

Assuming the 90 days trading horizon IShares Physical is expected to generate 2.58 times less return on investment than Resolute Mining. But when comparing it to its historical volatility, iShares Physical Silver is 2.12 times less risky than Resolute Mining. It trades about 0.06 of its potential returns per unit of risk. Resolute Mining Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,190  in Resolute Mining Limited on June 18, 2024 and sell it today you would earn a total of  2,520  from holding Resolute Mining Limited or generate 211.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

iShares Physical Silver  vs.  Resolute Mining Limited

iShares Physical Silver

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Physical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Resolute Mining

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Resolute Mining Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Resolute Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Physical and Resolute Mining

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

The idea behind iShares Physical Silver and Resolute Mining 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.