Correlation Between EMX Royalty and Largo Resources
Can any of the company-specific risk be diversified away by investing in both EMX Royalty and Largo Resources 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 Largo Resources 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 Largo Resources, you can compare the effects of market volatilities on EMX Royalty and Largo Resources 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 Largo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMX Royalty and Largo Resources.
Diversification Opportunities for EMX Royalty and Largo Resources
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EMX and Largo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and Largo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largo Resources 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 Largo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largo Resources has no effect on the direction of EMX Royalty i.e., EMX Royalty and Largo Resources go up and down completely randomly.
Pair Corralation between EMX Royalty and Largo Resources
Considering the 90-day investment horizon EMX Royalty Corp is expected to generate 0.47 times more return on investment than Largo Resources. However, EMX Royalty Corp is 2.12 times less risky than Largo Resources. It trades about -0.12 of its potential returns per unit of risk. Largo Resources is currently generating about -0.15 per unit of risk. If you would invest 183.00 in EMX Royalty Corp on September 1, 2024 and sell it today you would lose (9.00) from holding EMX Royalty Corp or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMX Royalty Corp vs. Largo Resources
Performance |
| Timeline |
| EMX Royalty Corp |
| Largo Resources |
EMX Royalty and Largo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMX Royalty and Largo Resources
The main advantage of trading using opposite EMX Royalty and Largo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMX Royalty position performs unexpectedly, Largo Resources 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 Largo Resources will offset losses from the drop in Largo Resources' 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 |
| Largo Resources vs. Skeena Resources | Largo Resources vs. Materion | Largo Resources vs. Compass Minerals International | Largo Resources vs. IperionX Limited American |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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