Correlation Between Gatos Silver and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Gatos Silver and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatos Silver and Dow Jones Industrial, you can compare the effects of market volatilities on Gatos Silver and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and Dow Jones.
Diversification Opportunities for Gatos Silver and Dow Jones
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gatos and Dow is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Gatos Silver i.e., Gatos Silver and Dow Jones go up and down completely randomly.
Pair Corralation between Gatos Silver and Dow Jones
Assuming the 90 days trading horizon Gatos Silver is expected to generate 5.77 times more return on investment than Dow Jones. However, Gatos Silver is 5.77 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 600.00 in Gatos Silver on August 31, 2024 and sell it today you would earn a total of 1,577 from holding Gatos Silver or generate 262.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Gatos Silver vs. Dow Jones Industrial
Performance |
| Timeline |
Gatos Silver and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Gatos Silver
Pair trading matchups for Gatos Silver
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Gatos Silver and Dow Jones
The main advantage of trading using opposite Gatos Silver and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Gatos Silver vs. Solar Alliance Energy | Gatos Silver vs. Global X Active | Gatos Silver vs. Financial 15 Split | Gatos Silver vs. Rubicon Organics |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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