Correlation Between Gatos Silver and Albemarle

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

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

Diversification Opportunities for Gatos Silver and Albemarle

0.31

Correlation Coefficient

Gatos Silver  Albemarle

Weak diversification

The 3 months correlation between Gatos and Albemarle is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Gatos Silver i.e., Gatos Silver and Albemarle go up and down completely randomly.

Pair Corralation between Gatos Silver and Albemarle

Given the investment horizon of 90 days Gatos Silver is expected to generate 3.34 times less return on investment than Albemarle. In addition to that, Gatos Silver is 1.59 times more volatile than Albemarle. It trades about 0.01 of its total potential returns per unit of risk. Albemarle is currently generating about 0.07 per unit of volatility. If you would invest  4,184  in Albemarle on October 26, 2024 and sell it today you would earn a total of  100.00  from holding Albemarle or generate 2.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.78%
Values	Daily Returns

Gatos Silver  vs.  Albemarle

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 conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Albemarle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albemarle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Albemarle is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gatos Silver and Albemarle

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

The idea behind Gatos Silver and Albemarle 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.