Correlation Between Gatos Silver and Enbridge Pref

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Can any of the company-specific risk be diversified away by investing in both Gatos Silver and Enbridge Pref 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 Enbridge Pref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatos Silver and Enbridge Pref 1, you can compare the effects of market volatilities on Gatos Silver and Enbridge Pref 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 Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and Enbridge Pref.

Diversification Opportunities for Gatos Silver and Enbridge Pref

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Gatos and Enbridge is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Enbridge Pref 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 1 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 Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref 1 has no effect on the direction of Gatos Silver i.e., Gatos Silver and Enbridge Pref go up and down completely randomly.

Pair Corralation between Gatos Silver and Enbridge Pref

Assuming the 90 days trading horizon Gatos Silver is expected to generate 5.77 times more return on investment than Enbridge Pref. However, Gatos Silver is 5.77 times more volatile than Enbridge Pref 1. It trades about 0.09 of its potential returns per unit of risk. Enbridge Pref 1 is currently generating about 0.07 per unit of risk. If you would invest  620.00  in Gatos Silver on October 5, 2024 and sell it today you would earn a total of  1,548  from holding Gatos Silver or generate 249.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gatos Silver  vs.  Enbridge Pref 1

 Performance 
       Timeline  
Gatos Silver 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Gatos Silver may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Enbridge Pref 1 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Enbridge Pref is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Gatos Silver and Enbridge Pref Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gatos Silver and Enbridge Pref

The main advantage of trading using opposite Gatos Silver and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, Enbridge Pref 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 Enbridge Pref will offset losses from the drop in Enbridge Pref's long position.
The idea behind Gatos Silver and Enbridge Pref 1 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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