Correlation Between Brightrock Gold and Gatos Silver

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

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

Diversification Opportunities for Brightrock Gold and Gatos Silver

0.49

Correlation Coefficient

Brightrock Gold  Gatos Silver

Very weak diversification

The 3 months correlation between Brightrock and Gatos is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Brightrock Gold Corp and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Brightrock Gold 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 Brightrock Gold Corp 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 Brightrock Gold i.e., Brightrock Gold and Gatos Silver go up and down completely randomly.

Pair Corralation between Brightrock Gold and Gatos Silver

Given the investment horizon of 90 days Brightrock Gold Corp is expected to generate 2.58 times more return on investment than Gatos Silver. However, Brightrock Gold is 2.58 times more volatile than Gatos Silver. It trades about 0.22 of its potential returns per unit of risk. Gatos Silver is currently generating about 0.0 per unit of risk. If you would invest  7.30  in Brightrock Gold Corp on October 15, 2024 and sell it today you would earn a total of  2.10  from holding Brightrock Gold Corp or generate 28.77% return on investment over 90 days.

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

Brightrock Gold Corp  vs.  Gatos Silver

Brightrock Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brightrock Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Brightrock Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Brightrock Gold and Gatos Silver

The main advantage of trading using opposite Brightrock Gold and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightrock Gold 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 Brightrock Gold Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.