Correlation Between Gatos Silver and Monument Mining
Can any of the company-specific risk be diversified away by investing in both Gatos Silver and Monument Mining 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 Monument Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatos Silver and Monument Mining Limited, you can compare the effects of market volatilities on Gatos Silver and Monument Mining 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 Monument Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and Monument Mining.
Diversification Opportunities for Gatos Silver and Monument Mining
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gatos and Monument is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining 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 Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Gatos Silver i.e., Gatos Silver and Monument Mining go up and down completely randomly.
Pair Corralation between Gatos Silver and Monument Mining
Assuming the 90 days trading horizon Gatos Silver is expected to generate 1.95 times less return on investment than Monument Mining. But when comparing it to its historical volatility, Gatos Silver is 1.11 times less risky than Monument Mining. It trades about 0.07 of its potential returns per unit of risk. Monument Mining Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Monument Mining Limited on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Monument Mining Limited or generate 85.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gatos Silver vs. Monument Mining Limited
Performance |
| Timeline |
| Gatos Silver |
| Monument Mining |
Gatos Silver and Monument Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gatos Silver and Monument Mining
The main advantage of trading using opposite Gatos Silver and Monument Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, Monument Mining 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 Monument Mining will offset losses from the drop in Monument Mining'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 |
| Monument Mining vs. First Majestic Silver | Monument Mining vs. Ivanhoe Energy | Monument Mining vs. Orezone Gold Corp | Monument Mining vs. Faraday Copper Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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