Correlation Between Stillwater Critical and Gatos Silver

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

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

Diversification Opportunities for Stillwater Critical and Gatos Silver

0.83

Correlation Coefficient

Stillwater Critical  Gatos Silver

Very poor diversification

The 3 months correlation between Stillwater and Gatos is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Stillwater Critical Minerals and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Stillwater Critical 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 Stillwater Critical Minerals 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 Stillwater Critical i.e., Stillwater Critical and Gatos Silver go up and down completely randomly.

Pair Corralation between Stillwater Critical and Gatos Silver

Assuming the 90 days horizon Stillwater Critical Minerals is expected to under-perform the Gatos Silver. In addition to that, Stillwater Critical is 1.09 times more volatile than Gatos Silver. It trades about -0.35 of its total potential returns per unit of risk. Gatos Silver is currently generating about -0.15 per unit of volatility. If you would invest  2,257  in Gatos Silver on September 22, 2024 and sell it today you would lose (267.00) from holding Gatos Silver or give up 11.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Stillwater Critical Minerals  vs.  Gatos Silver

Stillwater Critical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stillwater Critical Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Stillwater Critical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Stillwater Critical and Gatos Silver

The main advantage of trading using opposite Stillwater Critical and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stillwater Critical 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 Stillwater Critical Minerals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.