Correlation Between Yerbae Brands and Gatos Silver

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

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

Diversification Opportunities for Yerbae Brands and Gatos Silver

0.05

Correlation Coefficient

Yerbae Brands  Gatos Silver

Significant diversification

The 3 months correlation between Yerbae and Gatos is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Yerbae Brands Corp and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Yerbae Brands 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 Yerbae Brands Corp 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 Yerbae Brands i.e., Yerbae Brands and Gatos Silver go up and down completely randomly.

Pair Corralation between Yerbae Brands and Gatos Silver

Assuming the 90 days trading horizon Yerbae Brands Corp is expected to under-perform the Gatos Silver. In addition to that, Yerbae Brands is 2.1 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 0.07 per unit of volatility. If you would invest  692.00  in Gatos Silver on October 4, 2024 and sell it today you would earn a total of  1,320  from holding Gatos Silver or generate 190.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.76%
Values	Daily Returns

Yerbae Brands Corp  vs.  Gatos Silver

Yerbae Brands Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yerbae Brands Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Yerbae Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Gatos Silver

Risk-Adjusted Performance

1 of 100

Very 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 recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Yerbae Brands and Gatos Silver

The main advantage of trading using opposite Yerbae Brands and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yerbae Brands 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 Yerbae Brands Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.