Correlation Between BOEING CDR and Gatos Silver

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

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

Diversification Opportunities for BOEING CDR and Gatos Silver

-0.36

Correlation Coefficient

BOEING CDR  Gatos Silver

Very good diversification

The 3 months correlation between BOEING and Gatos is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BOEING CDR and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and BOEING CDR 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 BOEING CDR 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 BOEING CDR i.e., BOEING CDR and Gatos Silver go up and down completely randomly.

Pair Corralation between BOEING CDR and Gatos Silver

Assuming the 90 days trading horizon BOEING CDR is expected to generate 0.46 times more return on investment than Gatos Silver. However, BOEING CDR is 2.2 times less risky than Gatos Silver. It trades about 0.29 of its potential returns per unit of risk. Gatos Silver is currently generating about -0.13 per unit of risk. If you would invest  2,726  in BOEING CDR on October 9, 2024 and sell it today you would earn a total of  229.00  from holding BOEING CDR or generate 8.4% return on investment over 90 days.

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

BOEING CDR  vs.  Gatos Silver

BOEING CDR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOEING CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BOEING CDR displayed solid returns over the last few months and may actually be approaching a breakup point.

Gatos Silver

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, Gatos Silver is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BOEING CDR and Gatos Silver

The main advantage of trading using opposite BOEING CDR and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOEING CDR 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 BOEING CDR 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.