Correlation Between Black Knight and Gatos Silver

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Can any of the company-specific risk be diversified away by investing in both Black Knight 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 Black Knight and Gatos Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Knight and Gatos Silver, you can compare the effects of market volatilities on Black Knight 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 Black Knight with a short position of Gatos Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Knight and Gatos Silver.

Diversification Opportunities for Black Knight and Gatos Silver

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Black and Gatos is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Black Knight and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Black Knight 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 Black Knight 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 Black Knight i.e., Black Knight and Gatos Silver go up and down completely randomly.

Pair Corralation between Black Knight and Gatos Silver

Considering the 90-day investment horizon Black Knight is expected to generate 1.89 times less return on investment than Gatos Silver. But when comparing it to its historical volatility, Black Knight is 2.21 times less risky than Gatos Silver. It trades about 0.08 of its potential returns per unit of risk. Gatos Silver is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  518.00  in Gatos Silver on January 17, 2024 and sell it today you would earn a total of  448.00  from holding Gatos Silver or generate 86.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy50.32%
ValuesDaily Returns

Black Knight  vs.  Gatos Silver

 Performance 
       Timeline  
Black Knight 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
Gatos Silver 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 15 (%) 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.

Black Knight and Gatos Silver Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Black Knight and Gatos Silver

The main advantage of trading using opposite Black Knight and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Knight 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 Black Knight 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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