Correlation Between 26875PAP6 and Gatos Silver

Can any of the company-specific risk be diversified away by investing in both 26875PAP6 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 26875PAP6 and Gatos Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EOG RES INC and Gatos Silver, you can compare the effects of market volatilities on 26875PAP6 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 26875PAP6 with a short position of Gatos Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26875PAP6 and Gatos Silver.

Diversification Opportunities for 26875PAP6 and Gatos Silver

-0.18

Correlation Coefficient

26875PAP6  Gatos Silver

Good diversification

The 3 months correlation between 26875PAP6 and Gatos is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding EOG RES INC and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and 26875PAP6 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 EOG RES INC 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 26875PAP6 i.e., 26875PAP6 and Gatos Silver go up and down completely randomly.

Pair Corralation between 26875PAP6 and Gatos Silver

Assuming the 90 days trading horizon EOG RES INC is expected to generate 0.06 times more return on investment than Gatos Silver. However, EOG RES INC is 18.03 times less risky than Gatos Silver. It trades about -0.08 of its potential returns per unit of risk. Gatos Silver is currently generating about -0.14 per unit of risk. If you would invest  9,942  in EOG RES INC on October 27, 2024 and sell it today you would lose (94.00) from holding EOG RES INC or give up 0.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

EOG RES INC  vs.  Gatos Silver

EOG RES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAP6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 26875PAP6 and Gatos Silver

The main advantage of trading using opposite 26875PAP6 and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26875PAP6 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 EOG RES INC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.