Correlation Between Gatos Silver and SNDL
Can any of the company-specific risk be diversified away by investing in both Gatos Silver and SNDL 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 SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatos Silver and SNDL Inc, you can compare the effects of market volatilities on Gatos Silver and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and SNDL.
Diversification Opportunities for Gatos Silver and SNDL
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gatos and SNDL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Gatos Silver i.e., Gatos Silver and SNDL go up and down completely randomly.
Pair Corralation between Gatos Silver and SNDL
Given the investment horizon of 90 days Gatos Silver is expected to generate 1.2 times more return on investment than SNDL. However, Gatos Silver is 1.2 times more volatile than SNDL Inc. It trades about 0.09 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.07 per unit of risk. If you would invest 1,382 in Gatos Silver on October 20, 2024 and sell it today you would earn a total of 58.00 from holding Gatos Silver or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Gatos Silver vs. SNDL Inc
Performance |
| Timeline |
| Gatos Silver |
| SNDL Inc |
Gatos Silver and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gatos Silver and SNDL
The main advantage of trading using opposite Gatos Silver and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL's long position.| Gatos Silver vs. Endeavour Silver Corp | Gatos Silver vs. Metalla Royalty Streaming | Gatos Silver vs. New Pacific Metals | Gatos Silver vs. Hecla Mining |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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