Correlation Between SunOpta and Gatos Silver

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

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

Diversification Opportunities for SunOpta and Gatos Silver

-0.71

Correlation Coefficient

SunOpta  Gatos Silver

Pay attention - limited upside

The 3 months correlation between SunOpta and Gatos is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and SunOpta 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 SunOpta 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 SunOpta i.e., SunOpta and Gatos Silver go up and down completely randomly.

Pair Corralation between SunOpta and Gatos Silver

Given the investment horizon of 90 days SunOpta is expected to generate 0.79 times more return on investment than Gatos Silver. However, SunOpta is 1.27 times less risky than Gatos Silver. It trades about 0.17 of its potential returns per unit of risk. Gatos Silver is currently generating about -0.15 per unit of risk. If you would invest  572.00  in SunOpta on October 23, 2024 and sell it today you would earn a total of  158.00  from holding SunOpta or generate 27.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

SunOpta  vs.  Gatos Silver

SunOpta

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta disclosed 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 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 SunOpta and Gatos Silver

The main advantage of trading using opposite SunOpta and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta 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 SunOpta 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.