Correlation Between Golden Minerals and Gatos Silver

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

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

Diversification Opportunities for Golden Minerals and Gatos Silver

0.74

Correlation Coefficient

Golden Minerals  Gatos Silver

Poor diversification

The 3 months correlation between Golden and Gatos is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Golden Minerals and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Golden Minerals 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 Golden Minerals are associated (or correlated) with Gatos Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatos Silver has no effect on the direction of Golden Minerals i.e., Golden Minerals and Gatos Silver go up and down completely randomly.

Pair Corralation between Golden Minerals and Gatos Silver

Given the investment horizon of 90 days Golden Minerals is expected to under-perform the Gatos Silver. In addition to that, Golden Minerals is 2.12 times more volatile than Gatos Silver. It trades about -0.17 of its total potential returns per unit of risk. Gatos Silver is currently generating about -0.05 per unit of volatility. If you would invest  1,638  in Gatos Silver on September 26, 2024 and sell it today you would lose (244.00) from holding Gatos Silver or give up 14.9% of portfolio value over 90 days.

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

Golden Minerals  vs.  Gatos Silver

Golden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Gatos Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gatos Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Golden Minerals and Gatos Silver

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

The idea behind Golden Minerals and Gatos 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.