Correlation Between NextSource Materials and Gatos Silver
Can any of the company-specific risk be diversified away by investing in both NextSource Materials and Gatos Silver 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 NextSource Materials and Gatos Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Gatos Silver, you can compare the effects of market volatilities on NextSource Materials and Gatos Silver 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 NextSource Materials with a short position of Gatos Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Gatos Silver.
Diversification Opportunities for NextSource Materials and Gatos Silver
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NextSource and Gatos is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and NextSource Materials 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 NextSource Materials are associated (or correlated) with Gatos Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatos Silver has no effect on the direction of NextSource Materials i.e., NextSource Materials and Gatos Silver go up and down completely randomly.
Pair Corralation between NextSource Materials and Gatos Silver
Assuming the 90 days trading horizon NextSource Materials is expected to under-perform the Gatos Silver. In addition to that, NextSource Materials is 1.11 times more volatile than Gatos Silver. It trades about -0.04 of its total potential returns per unit of risk. Gatos Silver is currently generating about 0.08 per unit of volatility. If you would invest 695.00 in Gatos Silver on October 12, 2024 and sell it today you would earn a total of 1,506 from holding Gatos Silver or generate 216.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextSource Materials vs. Gatos Silver
Performance |
| Timeline |
| NextSource Materials |
| Gatos Silver |
NextSource Materials and Gatos Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextSource Materials and Gatos Silver
The main advantage of trading using opposite NextSource Materials and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials position performs unexpectedly, Gatos Silver 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 Gatos Silver will offset losses from the drop in Gatos Silver's long position.| NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Northern Graphite | NextSource Materials vs. Lomiko Metals | NextSource Materials vs. Elcora Advanced Materials |
| Gatos Silver vs. SilverCrest Metals | Gatos Silver vs. Reyna Silver Corp | Gatos Silver vs. New Pacific Metals | Gatos Silver vs. GoGold Resources |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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