Correlation Between EMX Royalty and BHP Group
Can any of the company-specific risk be diversified away by investing in both EMX Royalty and BHP Group 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 EMX Royalty and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMX Royalty Corp and BHP Group Limited, you can compare the effects of market volatilities on EMX Royalty and BHP Group 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 EMX Royalty with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMX Royalty and BHP Group.
Diversification Opportunities for EMX Royalty and BHP Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EMX and BHP is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and EMX Royalty 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 EMX Royalty Corp are associated (or correlated) with BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of EMX Royalty i.e., EMX Royalty and BHP Group go up and down completely randomly.
Pair Corralation between EMX Royalty and BHP Group
Considering the 90-day investment horizon EMX Royalty Corp is expected to generate 2.14 times more return on investment than BHP Group. However, EMX Royalty is 2.14 times more volatile than BHP Group Limited. It trades about 0.04 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.3 per unit of risk. If you would invest 173.00 in EMX Royalty Corp on October 15, 2024 and sell it today you would earn a total of 2.00 from holding EMX Royalty Corp or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
EMX Royalty Corp vs. BHP Group Limited
Performance |
| Timeline |
| EMX Royalty Corp |
| BHP Group Limited |
EMX Royalty and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMX Royalty and BHP Group
The main advantage of trading using opposite EMX Royalty and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMX Royalty position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| EMX Royalty vs. Metalla Royalty Streaming | EMX Royalty vs. Osisko Gold Ro | EMX Royalty vs. Equinox Gold Corp | EMX Royalty vs. SilverCrest Metals |
| BHP Group vs. Vale SA ADR | BHP Group vs. Teck Resources Ltd | BHP Group vs. Lithium Americas Corp | BHP Group vs. MP Materials Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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