Correlation Between Gatos Silver and Summa Silver

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

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

Diversification Opportunities for Gatos Silver and Summa Silver

0.12

Correlation Coefficient

Gatos Silver  Summa Silver

Average diversification

The 3 months correlation between Gatos and Summa is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp 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 Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Gatos Silver i.e., Gatos Silver and Summa Silver go up and down completely randomly.

Pair Corralation between Gatos Silver and Summa Silver

Given the investment horizon of 90 days Gatos Silver is expected to generate 0.93 times more return on investment than Summa Silver. However, Gatos Silver is 1.07 times less risky than Summa Silver. It trades about 0.13 of its potential returns per unit of risk. Summa Silver Corp is currently generating about -0.09 per unit of risk. 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gatos Silver  vs.  Summa Silver Corp

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.

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp 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.

Pair Trading with Gatos Silver and Summa Silver

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

The idea behind Gatos Silver and Summa Silver Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.