Correlation Between IShares Canadian and Gatos Silver

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

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

Diversification Opportunities for IShares Canadian and Gatos Silver

-0.49

Correlation Coefficient

IShares Canadian  Gatos Silver

Very good diversification

The 3 months correlation between IShares and Gatos is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and IShares Canadian 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 iShares Canadian HYBrid 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 IShares Canadian i.e., IShares Canadian and Gatos Silver go up and down completely randomly.

Pair Corralation between IShares Canadian and Gatos Silver

Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.3 times less return on investment than Gatos Silver. But when comparing it to its historical volatility, iShares Canadian HYBrid is 14.49 times less risky than Gatos Silver. It trades about 0.13 of its potential returns per unit of risk. Gatos Silver is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,159  in Gatos Silver on October 4, 2024 and sell it today you would earn a total of  9.00  from holding Gatos Silver or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

iShares Canadian HYBrid  vs.  Gatos Silver

iShares Canadian HYBrid

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Gatos Silver

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gatos Silver is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Canadian and Gatos Silver

The main advantage of trading using opposite IShares Canadian and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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 iShares Canadian HYBrid 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.