Correlation Between Sierra Madre and Sable Resources

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

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

Diversification Opportunities for Sierra Madre and Sable Resources

0.22

Correlation Coefficient

Sierra Madre  Sable Resources

Modest diversification

The 3 months correlation between Sierra and Sable is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Madre Gold and Sable Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Resources and Sierra Madre 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 Sierra Madre Gold are associated (or correlated) with Sable Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Resources has no effect on the direction of Sierra Madre i.e., Sierra Madre and Sable Resources go up and down completely randomly.

Pair Corralation between Sierra Madre and Sable Resources

Assuming the 90 days horizon Sierra Madre is expected to generate 1.08 times less return on investment than Sable Resources. But when comparing it to its historical volatility, Sierra Madre Gold is 1.55 times less risky than Sable Resources. It trades about 0.07 of its potential returns per unit of risk. Sable Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Sable Resources on May 4, 2025 and sell it today you would earn a total of  0.20  from holding Sable Resources or generate 8.0% return on investment over 90 days.

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

Sierra Madre Gold  vs.  Sable Resources

Sierra Madre Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra Madre Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sierra Madre reported solid returns over the last few months and may actually be approaching a breakup point.

Sable Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sable Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sierra Madre and Sable Resources

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

The idea behind Sierra Madre Gold and Sable Resources 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.