Correlation Between Gatos Silver and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Gatos Silver and NexGen Energy 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 NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatos Silver and NexGen Energy, you can compare the effects of market volatilities on Gatos Silver and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and NexGen Energy.
Diversification Opportunities for Gatos Silver and NexGen Energy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gatos and NexGen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of Gatos Silver i.e., Gatos Silver and NexGen Energy go up and down completely randomly.
Pair Corralation between Gatos Silver and NexGen Energy
Assuming the 90 days trading horizon Gatos Silver is expected to generate 1.36 times more return on investment than NexGen Energy. However, Gatos Silver is 1.36 times more volatile than NexGen Energy. It trades about 0.09 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.07 per unit of risk. If you would invest 529.00 in Gatos Silver on August 25, 2024 and sell it today you would earn a total of 1,686 from holding Gatos Silver or generate 318.71% 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. NexGen Energy
Performance |
| Timeline |
| Gatos Silver |
| NexGen Energy |
Gatos Silver and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gatos Silver and NexGen Energy
The main advantage of trading using opposite Gatos Silver and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| Gatos Silver vs. First Majestic Silver | Gatos Silver vs. Ivanhoe Energy | Gatos Silver vs. Orezone Gold Corp | Gatos Silver vs. Faraday Copper Corp |
| NexGen Energy vs. Fission Uranium Corp | NexGen Energy vs. Denison Mines Corp | NexGen Energy vs. Energy Fuels | NexGen Energy vs. enCore Energy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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