Correlation Between Bear Creek and Guanajuato Silver

Can any of the company-specific risk be diversified away by investing in both Bear Creek and Guanajuato 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 Guanajuato 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 Guanajuato Silver, you can compare the effects of market volatilities on Bear Creek and Guanajuato 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 Guanajuato Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bear Creek and Guanajuato Silver.

Diversification Opportunities for Bear Creek and Guanajuato Silver

0.73

Correlation Coefficient

Bear Creek  Guanajuato Silver

Poor diversification

The 3 months correlation between Bear and Guanajuato is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bear Creek Mining and Guanajuato Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guanajuato Silver 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 Guanajuato Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guanajuato Silver has no effect on the direction of Bear Creek i.e., Bear Creek and Guanajuato Silver go up and down completely randomly.

Pair Corralation between Bear Creek and Guanajuato Silver

Assuming the 90 days horizon Bear Creek is expected to generate 4.24 times less return on investment than Guanajuato Silver. But when comparing it to its historical volatility, Bear Creek Mining is 1.2 times less risky than Guanajuato Silver. It trades about 0.06 of its potential returns per unit of risk. Guanajuato Silver is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Guanajuato Silver on April 25, 2025 and sell it today you would earn a total of  15.00  from holding Guanajuato Silver or generate 83.33% return on investment over 90 days.

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

Bear Creek Mining  vs.  Guanajuato Silver

Bear Creek Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bear Creek Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bear Creek showed solid returns over the last few months and may actually be approaching a breakup point.

Guanajuato Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guanajuato Silver are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Guanajuato Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bear Creek and Guanajuato Silver

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

The idea behind Bear Creek Mining and Guanajuato Silver 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.