Correlation Between Gatos Silver and TMT Acquisition

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

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

Diversification Opportunities for Gatos Silver and TMT Acquisition

-0.46

Correlation Coefficient

Gatos Silver  TMT Acquisition

Very good diversification

The 3 months correlation between Gatos and TMT is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and TMT Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Acquisition 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 TMT Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Acquisition Corp has no effect on the direction of Gatos Silver i.e., Gatos Silver and TMT Acquisition go up and down completely randomly.

Pair Corralation between Gatos Silver and TMT Acquisition

Given the investment horizon of 90 days Gatos Silver is expected to generate 0.98 times more return on investment than TMT Acquisition. However, Gatos Silver is 1.02 times less risky than TMT Acquisition. It trades about 0.07 of its potential returns per unit of risk. TMT Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest  525.00  in Gatos Silver on October 11, 2024 and sell it today you would earn a total of  971.00  from holding Gatos Silver or generate 184.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.88%
Values	Daily Returns

Gatos Silver  vs.  TMT Acquisition 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 latest stock price disarray, may contribute to short-term losses for the investors.

TMT Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMT Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gatos Silver and TMT Acquisition

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

The idea behind Gatos Silver and TMT Acquisition 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.