Correlation Between Gatos Silver and Braveheart Resources

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

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

Diversification Opportunities for Gatos Silver and Braveheart Resources

-0.21

Correlation Coefficient

Gatos Silver  Braveheart Resources

Very good diversification

The 3 months correlation between Gatos and Braveheart is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Braveheart Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braveheart Resources 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 Braveheart Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braveheart Resources has no effect on the direction of Gatos Silver i.e., Gatos Silver and Braveheart Resources go up and down completely randomly.

Pair Corralation between Gatos Silver and Braveheart Resources

Given the investment horizon of 90 days Gatos Silver is expected to under-perform the Braveheart Resources. But the stock apears to be less risky and, when comparing its historical volatility, Gatos Silver is 1.73 times less risky than Braveheart Resources. The stock trades about -0.26 of its potential returns per unit of risk. The Braveheart Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2.88  in Braveheart Resources on September 2, 2024 and sell it today you would lose (0.14) from holding Braveheart Resources or give up 4.86% of portfolio value over 90 days.

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

Gatos Silver  vs.  Braveheart Resources

Gatos Silver

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Gatos Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Braveheart Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Braveheart Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Braveheart Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gatos Silver and Braveheart Resources

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

The idea behind Gatos Silver and Braveheart Resources 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.