Correlation Between Gatos Silver and 00108WAF7

Can any of the company-specific risk be diversified away by investing in both Gatos Silver and 00108WAF7 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 00108WAF7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gatos Silver and AEP TEX INC, you can compare the effects of market volatilities on Gatos Silver and 00108WAF7 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 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and 00108WAF7.

Diversification Opportunities for Gatos Silver and 00108WAF7

0.53

Correlation Coefficient

Gatos Silver  00108WAF7

Very weak diversification

The 3 months correlation between Gatos and 00108WAF7 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC 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 00108WAF7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of Gatos Silver i.e., Gatos Silver and 00108WAF7 go up and down completely randomly.

Pair Corralation between Gatos Silver and 00108WAF7

Given the investment horizon of 90 days Gatos Silver is expected to under-perform the 00108WAF7. In addition to that, Gatos Silver is 1.21 times more volatile than AEP TEX INC. It trades about -0.15 of its total potential returns per unit of risk. AEP TEX INC is currently generating about 0.04 per unit of volatility. If you would invest  7,420  in AEP TEX INC on October 23, 2024 and sell it today you would earn a total of  248.00  from holding AEP TEX INC or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.69%
Values	Daily Returns

Gatos Silver  vs.  AEP TEX INC

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.

AEP TEX INC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, 00108WAF7 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gatos Silver and 00108WAF7

The main advantage of trading using opposite Gatos Silver and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position.

The idea behind Gatos Silver and AEP TEX INC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..