Correlation Between Gatos Silver and WesBanco

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

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

Diversification Opportunities for Gatos Silver and WesBanco

-0.51

Correlation Coefficient

Gatos Silver  WesBanco

Excellent diversification

The 3 months correlation between Gatos and WesBanco is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Gatos Silver i.e., Gatos Silver and WesBanco go up and down completely randomly.

Pair Corralation between Gatos Silver and WesBanco

Given the investment horizon of 90 days Gatos Silver is expected to generate 8.69 times more return on investment than WesBanco. However, Gatos Silver is 8.69 times more volatile than WesBanco. It trades about 0.08 of its potential returns per unit of risk. WesBanco is currently generating about 0.13 per unit of risk. If you would invest  980.00  in Gatos Silver on October 9, 2024 and sell it today you would earn a total of  528.00  from holding Gatos Silver or generate 53.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gatos Silver  vs.  WesBanco

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.

WesBanco

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gatos Silver and WesBanco

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

The idea behind Gatos Silver and WesBanco 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.