Correlation Between Gatos Silver and ISign Media

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

By analyzing existing cross correlation between Gatos Silver and iSign Media Solutions, you can compare the effects of market volatilities on Gatos Silver and ISign Media 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 ISign Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gatos Silver and ISign Media.

Diversification Opportunities for Gatos Silver and ISign Media

0.02

Correlation Coefficient

Gatos Silver  ISign Media

Significant diversification

The 3 months correlation between Gatos and ISign is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and iSign Media Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSign Media Solutions 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 ISign Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSign Media Solutions has no effect on the direction of Gatos Silver i.e., Gatos Silver and ISign Media go up and down completely randomly.

Pair Corralation between Gatos Silver and ISign Media

Assuming the 90 days trading horizon Gatos Silver is expected to generate 4.9 times more return on investment than ISign Media. However, Gatos Silver is 4.9 times more volatile than iSign Media Solutions. It trades about 0.07 of its potential returns per unit of risk. iSign Media Solutions is currently generating about 0.09 per unit of risk. If you would invest  2,097  in Gatos Silver on September 13, 2024 and sell it today you would earn a total of  297.00  from holding Gatos Silver or generate 14.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gatos Silver  vs.  iSign Media Solutions

Gatos Silver

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Gatos Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

iSign Media Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iSign Media Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, ISign Media is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Gatos Silver and ISign Media

The main advantage of trading using opposite Gatos Silver and ISign Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gatos Silver position performs unexpectedly, ISign Media 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 ISign Media will offset losses from the drop in ISign Media's long position.

The idea behind Gatos Silver and iSign Media Solutions 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.