Correlation Between Gatos Silver and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both Gatos Silver and Amazon CDR 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 Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gatos Silver and Amazon CDR, you can compare the effects of market volatilities on Gatos Silver and Amazon CDR 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 Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and Amazon CDR.
Diversification Opportunities for Gatos Silver and Amazon CDR
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gatos and Amazon is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR 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 Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Gatos Silver i.e., Gatos Silver and Amazon CDR go up and down completely randomly.
Pair Corralation between Gatos Silver and Amazon CDR
Assuming the 90 days trading horizon Gatos Silver is expected to under-perform the Amazon CDR. In addition to that, Gatos Silver is 1.99 times more volatile than Amazon CDR. It trades about -0.07 of its total potential returns per unit of risk. Amazon CDR is currently generating about 0.31 per unit of volatility. If you would invest 2,401 in Amazon CDR on September 25, 2024 and sell it today you would earn a total of 277.00 from holding Amazon CDR or generate 11.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gatos Silver vs. Amazon CDR
Performance |
Timeline |
Gatos Silver |
Amazon CDR |
Gatos Silver and Amazon CDR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gatos Silver and Amazon CDR
The main advantage of trading using opposite Gatos Silver and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, Amazon CDR 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 Amazon CDR will offset losses from the drop in Amazon CDR's long position.Gatos Silver vs. SilverCrest Metals | Gatos Silver vs. Reyna Silver Corp | Gatos Silver vs. New Pacific Metals | Gatos Silver vs. GoGold Resources |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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