Correlation Between GMO Internet and Gatos Silver

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

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

Diversification Opportunities for GMO Internet and Gatos Silver

0.03

Correlation Coefficient

GMO Internet  Gatos Silver

Significant diversification

The 3 months correlation between GMO and Gatos is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and GMO Internet 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 GMO Internet are associated (or correlated) with Gatos Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatos Silver has no effect on the direction of GMO Internet i.e., GMO Internet and Gatos Silver go up and down completely randomly.

Pair Corralation between GMO Internet and Gatos Silver

Assuming the 90 days horizon GMO Internet is expected to under-perform the Gatos Silver. But the pink sheet apears to be less risky and, when comparing its historical volatility, GMO Internet is 2.06 times less risky than Gatos Silver. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Gatos Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,414  in Gatos Silver on October 25, 2024 and sell it today you would earn a total of  26.00  from holding Gatos Silver or generate 1.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

GMO Internet  vs.  Gatos Silver

GMO Internet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMO Internet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GMO Internet is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with GMO Internet and Gatos Silver

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

The idea behind GMO Internet and Gatos Silver 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.