Correlation Between Gatos Silver and Sprott Physical
Can any of the company-specific risk be diversified away by investing in both Gatos Silver and Sprott Physical 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 Gatos Silver and Sprott Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatos Silver and Sprott Physical Gold, you can compare the effects of market volatilities on Gatos Silver and Sprott Physical 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 Gatos Silver with a short position of Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and Sprott Physical.
Diversification Opportunities for Gatos Silver and Sprott Physical
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gatos and Sprott is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold and Gatos Silver 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 Gatos Silver are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Gatos Silver i.e., Gatos Silver and Sprott Physical go up and down completely randomly.
Pair Corralation between Gatos Silver and Sprott Physical
Assuming the 90 days trading horizon Gatos Silver is expected to generate 3.18 times more return on investment than Sprott Physical. However, Gatos Silver is 3.18 times more volatile than Sprott Physical Gold. It trades about 0.13 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.33 per unit of risk. If you would invest 2,011 in Gatos Silver on October 24, 2024 and sell it today you would earn a total of 148.00 from holding Gatos Silver or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Gatos Silver vs. Sprott Physical Gold
Performance |
| Timeline |
| Gatos Silver |
| Sprott Physical Gold |
Gatos Silver and Sprott Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gatos Silver and Sprott Physical
The main advantage of trading using opposite Gatos Silver and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, Sprott Physical 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 Sprott Physical will offset losses from the drop in Sprott Physical's long position.| Gatos Silver vs. SilverCrest Metals | Gatos Silver vs. Reyna Silver Corp | Gatos Silver vs. New Pacific Metals | Gatos Silver vs. GoGold Resources |
| Sprott Physical vs. Northstar Clean Technologies | Sprott Physical vs. Brookfield Asset Management | Sprott Physical vs. Nicola Mining | Sprott Physical vs. Wilmington Capital Management |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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