Correlation Between Hycroft Mining and Gatos Silver

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

Diversification Opportunities for Hycroft Mining and Gatos Silver

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Hycroft and Gatos is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hycroft Mining Holding and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Hycroft Mining 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 Hycroft Mining Holding 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 Hycroft Mining i.e., Hycroft Mining and Gatos Silver go up and down completely randomly.

Pair Corralation between Hycroft Mining and Gatos Silver

Given the investment horizon of 90 days Hycroft Mining is expected to generate 2.77 times less return on investment than Gatos Silver. But when comparing it to its historical volatility, Hycroft Mining Holding is 1.06 times less risky than Gatos Silver. It trades about 0.17 of its potential returns per unit of risk. Gatos Silver is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  560.00  in Gatos Silver on December 29, 2023 and sell it today you would earn a total of  257.00  from holding Gatos Silver or generate 45.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Hycroft Mining Holding  vs.  Gatos Silver

 Performance 
       Timeline  
Hycroft Mining Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Hycroft Mining Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Hycroft Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Gatos Silver 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 8 (%) 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.

Hycroft Mining and Gatos Silver Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hycroft Mining and Gatos Silver

The main advantage of trading using opposite Hycroft Mining and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hycroft Mining 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 Hycroft Mining Holding 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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