Correlation Between Gatos Silver and Northcliff Resources
Can any of the company-specific risk be diversified away by investing in both Gatos Silver and Northcliff Resources 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 Northcliff Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatos Silver and Northcliff Resources, you can compare the effects of market volatilities on Gatos Silver and Northcliff Resources 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 Northcliff Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and Northcliff Resources.
Diversification Opportunities for Gatos Silver and Northcliff Resources
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gatos and Northcliff is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Northcliff Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northcliff Resources 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 Northcliff Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northcliff Resources has no effect on the direction of Gatos Silver i.e., Gatos Silver and Northcliff Resources go up and down completely randomly.
Pair Corralation between Gatos Silver and Northcliff Resources
Assuming the 90 days trading horizon Gatos Silver is expected to generate 1.62 times less return on investment than Northcliff Resources. But when comparing it to its historical volatility, Gatos Silver is 3.43 times less risky than Northcliff Resources. It trades about 0.13 of its potential returns per unit of risk. Northcliff Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Northcliff Resources on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Northcliff Resources or generate 0.0% 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. Northcliff Resources
Performance |
| Timeline |
| Gatos Silver |
| Northcliff Resources |
Gatos Silver and Northcliff Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gatos Silver and Northcliff Resources
The main advantage of trading using opposite Gatos Silver and Northcliff Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, Northcliff Resources 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 Northcliff Resources will offset losses from the drop in Northcliff Resources' long position.| Gatos Silver vs. SilverCrest Metals | Gatos Silver vs. Reyna Silver Corp | Gatos Silver vs. New Pacific Metals | Gatos Silver vs. GoGold Resources |
| Northcliff Resources vs. New Destiny Mining | Northcliff Resources vs. Black Widow Resources | Northcliff Resources vs. Magnum Goldcorp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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