Correlation Between Endeavour Silver and Gatos Silver

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

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

Diversification Opportunities for Endeavour Silver and Gatos Silver

0.92

Correlation Coefficient

Endeavour Silver  Gatos Silver

Almost no diversification

The 3 months correlation between Endeavour and Gatos is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Silver Corp and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Endeavour Silver 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 Endeavour Silver 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 Endeavour Silver i.e., Endeavour Silver and Gatos Silver go up and down completely randomly.

Pair Corralation between Endeavour Silver and Gatos Silver

Assuming the 90 days trading horizon Endeavour Silver Corp is expected to under-perform the Gatos Silver. But the stock apears to be less risky and, when comparing its historical volatility, Endeavour Silver Corp is 1.03 times less risky than Gatos Silver. The stock trades about -0.2 of its potential returns per unit of risk. The Gatos Silver is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,215  in Gatos Silver on September 23, 2024 and sell it today you would lose (225.00) from holding Gatos Silver or give up 10.16% of portfolio value over 90 days.

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

Endeavour Silver Corp  vs.  Gatos Silver

Endeavour Silver Corp

Risk-Adjusted Performance

4 of 100

Insignificant

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

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 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 Endeavour Silver and Gatos Silver

The main advantage of trading using opposite Endeavour Silver and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endeavour Silver 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 Endeavour Silver 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.