Correlation Between CMC Metals and Gatos Silver
Can any of the company-specific risk be diversified away by investing in both CMC Metals 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 CMC Metals and Gatos Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Metals and Gatos Silver, you can compare the effects of market volatilities on CMC Metals 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 CMC Metals with a short position of Gatos Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Metals and Gatos Silver.
Diversification Opportunities for CMC Metals and Gatos Silver
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between CMC and Gatos is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CMC Metals and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and CMC Metals 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 CMC Metals 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 CMC Metals i.e., CMC Metals and Gatos Silver go up and down completely randomly.
Pair Corralation between CMC Metals and Gatos Silver
Assuming the 90 days horizon CMC Metals is expected to generate 8.18 times more return on investment than Gatos Silver. However, CMC Metals is 8.18 times more volatile than Gatos Silver. It trades about 0.13 of its potential returns per unit of risk. Gatos Silver is currently generating about 0.07 per unit of risk. If you would invest 2.00 in CMC Metals on September 3, 2024 and sell it today you would lose (0.41) from holding CMC Metals or give up 20.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMC Metals vs. Gatos Silver
Performance |
| Timeline |
| CMC Metals |
| Gatos Silver |
CMC Metals and Gatos Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Metals and Gatos Silver
The main advantage of trading using opposite CMC Metals and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Metals 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.| CMC Metals vs. Bravo Mining Corp | CMC Metals vs. Southern Silver Exploration | CMC Metals vs. AbraSilver Resource Corp | CMC Metals vs. Gatos Silver |
| Gatos Silver vs. Endeavour Silver Corp | Gatos Silver vs. Metalla Royalty Streaming | Gatos Silver vs. New Pacific Metals | Gatos Silver vs. Hecla Mining |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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