Correlation Between Avino Silver and Gatos Silver

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

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

Diversification Opportunities for Avino Silver and Gatos Silver

0.95

Correlation Coefficient

Avino Silver  Gatos Silver

Almost no diversification

The 3 months correlation between Avino and Gatos is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Avino Silver Gold and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Avino 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 Avino Silver Gold 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 Avino Silver i.e., Avino Silver and Gatos Silver go up and down completely randomly.

Pair Corralation between Avino Silver and Gatos Silver

Assuming the 90 days trading horizon Avino Silver Gold is expected to under-perform the Gatos Silver. In addition to that, Avino Silver is 1.14 times more volatile than Gatos Silver. It trades about -0.17 of its total potential returns per unit of risk. Gatos Silver is currently generating about 0.24 per unit of volatility. If you would invest  1,260  in Gatos Silver on February 7, 2024 and sell it today you would earn a total of  184.00  from holding Gatos Silver or generate 14.6% return on investment over 90 days.

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

Avino Silver Gold  vs.  Gatos Silver

Avino Silver Gold

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avino Silver Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Avino Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Gatos Silver

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gatos Silver are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Gatos Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avino Silver and Gatos Silver

The main advantage of trading using opposite Avino Silver and Gatos Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avino Silver 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 Avino Silver Gold 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.