Correlation Between Brixton Metals and Gatos Silver

Can any of the company-specific risk be diversified away by investing in both Brixton Metals 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 Brixton Metals and Gatos Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brixton Metals and Gatos Silver, you can compare the effects of market volatilities on Brixton Metals 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 Brixton Metals with a short position of Gatos Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brixton Metals and Gatos Silver.

Diversification Opportunities for Brixton Metals and Gatos Silver

-0.16

Correlation Coefficient

Brixton Metals  Gatos Silver

Good diversification

The 3 months correlation between Brixton and Gatos is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Brixton Metals and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Brixton Metals 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 Brixton Metals 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 Brixton Metals i.e., Brixton Metals and Gatos Silver go up and down completely randomly.

Pair Corralation between Brixton Metals and Gatos Silver

Assuming the 90 days horizon Brixton Metals is expected to under-perform the Gatos Silver. But the otc stock apears to be less risky and, when comparing its historical volatility, Brixton Metals is 1.12 times less risky than Gatos Silver. The otc stock trades about -0.15 of its potential returns per unit of risk. The Gatos Silver is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,218  in Gatos Silver on September 5, 2024 and sell it today you would earn a total of  379.00  from holding Gatos Silver or generate 31.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Brixton Metals  vs.  Gatos Silver

Brixton Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brixton Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gatos Silver

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Gatos Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brixton Metals and Gatos Silver

The main advantage of trading using opposite Brixton Metals and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brixton Metals 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.

The idea behind Brixton Metals and Gatos Silver pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.