Correlation Between Gatos Silver and Metalla Royalty

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

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

Diversification Opportunities for Gatos Silver and Metalla Royalty

0.84

Correlation Coefficient

Gatos Silver  Metalla Royalty

Very poor diversification

The 3 months correlation between Gatos and Metalla is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gatos Silver and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming 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 Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of Gatos Silver i.e., Gatos Silver and Metalla Royalty go up and down completely randomly.

Pair Corralation between Gatos Silver and Metalla Royalty

Given the investment horizon of 90 days Gatos Silver is expected to generate 1.12 times more return on investment than Metalla Royalty. However, Gatos Silver is 1.12 times more volatile than Metalla Royalty Streaming. It trades about 0.35 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about 0.07 per unit of risk. If you would invest  801.00  in Gatos Silver on January 26, 2024 and sell it today you would earn a total of  190.00  from holding Gatos Silver or generate 23.72% return on investment over 90 days.

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

Gatos Silver  vs.  Metalla Royalty Streaming

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.

Metalla Royalty Streaming

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metalla Royalty Streaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Metalla Royalty may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Gatos Silver and Metalla Royalty

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

The idea behind Gatos Silver and Metalla Royalty Streaming 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.