Correlation Between Magna Mining and Gatos Silver

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

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

Diversification Opportunities for Magna Mining and Gatos Silver

-0.4

Correlation Coefficient

Magna Mining  Gatos Silver

Very good diversification

The 3 months correlation between Magna and Gatos is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Magna Mining and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Magna Mining 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 Magna Mining 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 Magna Mining i.e., Magna Mining and Gatos Silver go up and down completely randomly.

Pair Corralation between Magna Mining and Gatos Silver

Assuming the 90 days trading horizon Magna Mining is expected to generate 2.08 times less return on investment than Gatos Silver. In addition to that, Magna Mining is 1.19 times more volatile than Gatos Silver. It trades about 0.03 of its total potential returns per unit of risk. Gatos Silver is currently generating about 0.08 per unit of volatility. If you would invest  573.00  in Gatos Silver on September 26, 2024 and sell it today you would earn a total of  1,461  from holding Gatos Silver or generate 254.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Magna Mining  vs.  Gatos Silver

Magna Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Magna Mining showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Magna Mining and Gatos Silver

The main advantage of trading using opposite Magna Mining and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna Mining 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 Magna Mining 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.

Check out your portfolio center.

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.