Correlation Between HF Sinclair and Gatos Silver

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

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

Diversification Opportunities for HF Sinclair and Gatos Silver

0.54

Correlation Coefficient

HF Sinclair  Gatos Silver

Very weak diversification

The 3 months correlation between DINO and Gatos is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and HF Sinclair 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 HF Sinclair Corp 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 HF Sinclair i.e., HF Sinclair and Gatos Silver go up and down completely randomly.

Pair Corralation between HF Sinclair and Gatos Silver

Given the investment horizon of 90 days HF Sinclair is expected to generate 3.12 times less return on investment than Gatos Silver. But when comparing it to its historical volatility, HF Sinclair Corp is 1.95 times less risky than Gatos Silver. It trades about 0.04 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  339.00  in Gatos Silver on January 24, 2024 and sell it today you would earn a total of  602.00  from holding Gatos Silver or generate 177.58% return on investment over 90 days.

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

HF Sinclair Corp  vs.  Gatos Silver

HF Sinclair Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HF Sinclair Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, HF Sinclair may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Gatos Silver

Risk-Adjusted Performance

15 of 100

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.

Pair Trading with HF Sinclair and Gatos Silver

The main advantage of trading using opposite HF Sinclair and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair 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 HF Sinclair Corp 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.