Correlation Between Contango ORE and Royal Gold
Can any of the company-specific risk be diversified away by investing in both Contango ORE and Royal Gold 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 Contango ORE and Royal Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Contango ORE and Royal Gold, you can compare the effects of market volatilities on Contango ORE and Royal Gold 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 Contango ORE with a short position of Royal Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contango ORE and Royal Gold.
Diversification Opportunities for Contango ORE and Royal Gold
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Contango and Royal is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Gold and Contango ORE 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 Contango ORE are associated (or correlated) with Royal Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Gold has no effect on the direction of Contango ORE i.e., Contango ORE and Royal Gold go up and down completely randomly.
Pair Corralation between Contango ORE and Royal Gold
Given the investment horizon of 90 days Contango ORE is expected to under-perform the Royal Gold. In addition to that, Contango ORE is 1.38 times more volatile than Royal Gold. It trades about -0.34 of its total potential returns per unit of risk. Royal Gold is currently generating about -0.02 per unit of volatility. If you would invest 15,103 in Royal Gold on August 27, 2024 and sell it today you would lose (204.00) from holding Royal Gold or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Contango ORE vs. Royal Gold
Performance |
| Timeline |
| Contango ORE |
| Royal Gold |
Contango ORE and Royal Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contango ORE and Royal Gold
The main advantage of trading using opposite Contango ORE and Royal Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contango ORE position performs unexpectedly, Royal Gold 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 Royal Gold will offset losses from the drop in Royal Gold's long position.| Contango ORE vs. Labrador Gold Corp | Contango ORE vs. Aurion Resources | Contango ORE vs. Puma Exploration | Contango ORE vs. Golden Star Resource |
| Royal Gold vs. Wheaton Precious Metals | Royal Gold vs. Agnico Eagle Mines | Royal Gold vs. Sandstorm Gold Ltd | Royal Gold vs. Osisko Gold Ro |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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