Correlation Between Gatos Silver and Endeavour Silver

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

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

Diversification Opportunities for Gatos Silver and Endeavour Silver

0.92

Correlation Coefficient

Gatos Silver  Endeavour Silver

Almost no diversification

The 3 months correlation between Gatos and Endeavour is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Endeavour Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Silver Corp and Gatos 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 Gatos Silver are associated (or correlated) with Endeavour Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Silver Corp has no effect on the direction of Gatos Silver i.e., Gatos Silver and Endeavour Silver go up and down completely randomly.

Pair Corralation between Gatos Silver and Endeavour Silver

Assuming the 90 days trading horizon Gatos Silver is expected to generate 1.03 times more return on investment than Endeavour Silver. However, Gatos Silver is 1.03 times more volatile than Endeavour Silver Corp. It trades about -0.12 of its potential returns per unit of risk. Endeavour Silver Corp is currently generating about -0.2 per unit of risk. 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

Gatos Silver  vs.  Endeavour Silver Corp

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.

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.

Pair Trading with Gatos Silver and Endeavour Silver

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

The idea behind Gatos Silver and Endeavour Silver Corp 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.